BATON ROUGE, La. — A new Workforce Child Care Tax Credit took effect in Louisiana this year, offering expanded tax incentives for businesses that invest in high-quality child care for their employees.
Created through Act 454 of the 2025 Regular Legislative Session, the measure modernizes an existing credit and doubles the benefits available to employers who help provide access to child care. The program aligns with the state’s workforce development strategy by supporting working parents and helping businesses attract and retain employees.
“We want businesses around the state to be aware that we are now doubling the value of the tax credit to companies that help provide quality child care for their employees,” said Adam Knapp, CEO of Leaders for a Better Louisiana. “Access to reliable, affordable child care is essential for Louisiana’s working families and the businesses that depend on them.”
Dr. Libbie Sonnier, CEO of the Louisiana Policy Institute for Children, said the new law “provides critical support to working parents and incentivizes employers to invest in child care solutions, helping to build a stronger, more resilient workforce.”
Beginning in 2026, businesses can qualify for the Workforce Child Care Tax Credit by making eligible investments in child care facilities or services, with the credit claimable on 2027 tax returns. The program initially caps total credits at $1 million statewide, growing to as much as $5 million based on participation. Credits will be issued on a first-come, first-served basis.
Key provisions include:
- Doubling the maximum allowable expenses for businesses that support child care facilities, from $50,000 to $100,000 per tax year.
- Increasing the cap on payments to child care facilities on behalf of employees from $5,000 to $10,000 per child annually.
- Raising the annual limit for reserving or purchasing child care slots for employees’ children to $100,000.
- Expanding credits for businesses that partner with high-quality, top-rated child care providers.
Barry Erwin, chief policy officer at Leaders for a Better Louisiana, said the refundable credit “encourages greater local investment and collaboration with child care providers” to empower working parents and strengthen Louisiana’s economic foundation.
According to a Louisiana Policy Institute for Children study, workforce disruptions linked to inadequate child care cost state employers an estimated $762 million each year, contributing to a $1.3 billion overall annual loss to the state economy.
Supporters of the new credit said Act 454 is designed to make Louisiana more competitive and family-friendly by linking early childhood education access with workforce stability.
Additional details are available in the Louisiana Department of Revenue’s Workforce Child Care Tax Credits Bulletin #25-029.