Using Tax Credits to Help Address Child Care Challenges

Because child care is largely a private-pay market (i.e., a market driven by parents who pay fees for child care services), and parent fees comprise the operating budget for most child care settings, multiple strategies are needed to address market challenges. Tax incentives are one of several strategies to help spur investment where the market alone is insufficient. This report provides an overview of tax incentives available in multiple states designed to address economic challenges to child care systems.