Tax Credits for Day Care Facilities

Tax credits are offered against Kansas income tax liability for businesses providing child day care services to employees. These credits apply to taxpayers who pay for or locate child day care services for their employees or that provide facilities and necessary equipment for child day care services.

The credit is equal to 30 percent of the amount spent in Kansas during the tax year for child day care services purchased for the dependent children of the taxpayer’s employees. However, the credit for any taxpayer cannot exceed $30,000 for any tax year.

Employers wishing to establish a child day care facility primarily for the employees’ dependent children can claim additional benefits. A credit of up to 50 percent of the amount spent in the establishment of such a facility can be taken, up to $45,000 per taxpayer, during the first year. One or more taxpayers may work together to establish such a facility. In the taxable years after the year of establishment, the annual credit available to the taxpayer would be 30 percent of the amount expended for the annual operation of the facility but not to exceed $30,000 for any tax year.

When computing the credit, amounts received by the taxpayer as payment for use of the child day care services are subtracted from the annual cost of operating the facility.

In order to receive this tax credit, the child day care facility or provider must be licensed or registered in Kansas. Should the taxpayer qualify for the credit, the amount of the credit in excess of the taxpayer’s liability for the tax year will be refunded. The aggregate amount of child day care facility credits that may be claimed for any fiscal year cannot exceed $3 million statewide. 

Beginning in tax year 2013, this credit shall only be available to corporations subject to the Kansas corporate income tax, i.e. C Corporations. This credit shall not be available to individuals, partnerships, S Corporations, limited liability companies or other pass through entities. (Schedule K-56, K.S.A. 79-32,190 et seq.)

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