SB18-265: Child Care Savings Account Income Tax Benefits

• Establishes child care savings accounts for individuals with federal taxable income under $90,000 (or $180,000 for joint filers) beginning January 1, 2020, for paying child care expenses for dependents under age 6.

• Provides a 10% income tax credit on contributions to the account, with a maximum credit of $250 per account per year and $25,000 total credits per year; credits for personal account contributions are refundable, while other credits carry forward up to 5 years.

• Allows account funds to be used only for child care facility payments or financial institution service fees; unauthorized withdrawals trigger credit recapture and a 10% penalty on the recaptured credit.

• Permits taxpayers to subtract interest or income earned in the account from federal taxable income starting in tax years beginning January 1, 2020.

• Imposes annual reporting requirements on individuals claiming the credit; financial institutions have no tracking, reporting, or liability obligations beyond normal account procedures.