SB280 Alabama 2024 Session

Summary

Primary Sponsor

Garlan GudgerSenator

Republican

Session

Regular Session 2024

Title

Relating to child care and workforce development; to establish the employer tax credit, childcare facility tax credit, and nonprofit childcare provider grant program; to make legislative findings

Summary

SB280 creates three programs—an employer childcare tax credit, a childcare facility tax credit, and nonprofit childcare provider grants—to encourage private funding of childcare and expand high-quality, affordable childcare in Alabama.

What This Bill Does

It establishes tax credits for employers and childcare facilities and provides grants to nonprofit providers to fund childcare construction, expansion, or operation. Credits and grants have annual caps and are funded through state taxes and dedicated Education Trust Fund accounts, with potential refunds if credits exceed taxes owed. It defines eligible expenses, how credits are calculated based on quality ratings, and requires documentation and reporting; it also reserves a portion of funds for rural areas and sets a sunset period from 2025 through 2029 with rules to assess effectiveness before extension.

Who It Affects

• Employers and pass-through owners can claim an employer tax credit against applicable taxes for eligible childcare expenses, subject to caps and documentation requirements.
• Childcare facilities and nonprofit providers can receive a facility tax credit or nonprofit grants to support facility construction, expansion, operation, quality improvements, or increased capacity.

Key Provisions

• Three programs created: Employer Tax Credit, Facility Tax Credit, and Nonprofit Childcare Provider Grant.
• Employer Tax Credit: up to $1,000,000 per employer per year; aggregate annual caps: $15M (2025), $20M (2026), $25M (2027), $30M (2028), $35M (2029); credit equals total eligible expenses, with refunds if taxes owed are less than credit; pro rata ownership rules for pass-through entities; credits are non-transferable.
• Facility Tax Credit: up to $25,000 per year per childcare facility; amount based on average monthly eligible children and facility quality rating (STAR 5 to STAR 1); aggregate cap of $5,000,000 per year; refunds available under similar rules as the employer credit; pro rata rules for pass-through ownership.
• Nonprofit Childcare Provider Grant: grants up to $50,000 per nonprofit provider per year; aggregate cap of $5,000,000 per year; funds used for construction/expansion/improvement/repair/operation to increase quality or capacity; grant agreements require repayment if default occurs.
• Rural area reservations: at least 25% of amounts reserved for rural employers, rural-only providers, and rural nonprofit programs; priority and application order-based distribution; potential reversion of unused funds after a milestone.
• Administration and rules: the Department of Revenue and Department of Human Resources must adopt implementing rules by Jan 1, 2025; MOUs to detail information exchange; standardized forms and documentation requirements; forms treated as tax returns with penalties; annual reporting to measure impact on workforce participation.
• Funding and refunds: refunds for excess credits are paid from the Education Trust Fund into a dedicated Childcare Tax Credit Account; not all credits reduce other state funds, and there are mechanisms to protect other funds like the Alabama Special Mental Health Trust Fund.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue