AL HB368

Creates two refundable tax credits effective for tax years January 1, 2024 through December 31, 2028 to incentivize child care funding and increase workforce participation in Alabama.

Employer tax credit allows businesses to claim up to $1,000,000 per year for eligible expenses including construction, renovation, equipment purchase, maintenance of child care facilities, and payments to providers for employee child care services, with an aggregate annual cap of $15,000,000 for all employers.

Child care provider tax credit provides up to $25,000 per year per facility based on quality rating (ranging from $1,000 to $2,000 per eligible child monthly) for providers participating in the Alabama Quality STARS program, with an aggregate annual cap of $5,000,000 for all providers.

Requires at least 25 percent of each tax credit pool to be reserved for rural areas and establishes that credits are awarded on a first-come, first-served basis with automatic denial for incomplete applications.

Credits are refundable if taxes owed are less than credits received, funded through a dedicated Child Care Tax Credit Account within the Education Trust Fund, and cannot be carried forward or transferred to other taxpayers.