Child care tax credit expanded

Self-employed child care providers may apply for a state income tax credit under a bill approved by lawmakers Aug. 12.

Sen. Brett Lindstrom
Sen. Brett Lindstrom

Under the 2016 School Readiness Tax Credit Act, eligible staff members who are employees of child care and early childhood education programs participating in the Step Up to Quality child care program may apply to the state Department of Revenue for a refundable state income tax credit of up to $1,500.

LB266, introduced by Omaha Sen. Brett Lindstrom last session, adds self-employed individuals providing services for eligible child care and early childhood education programs to the definition of “eligible staff member,” allowing them to apply for the credit.

The bill also requires the state Department of Education to include those self-employed individuals in the Nebraska Early Childhood Professional Record System.

Finally, the bill allows credits awarded to passthrough entities to be distributed in the same manner and proportion as income.

The state Department of Revenue estimates that the bill will reduce state tax revenue by $71,000 in fiscal year 2020-21 and an additional $81,000 in FY2021-22.

Senators voted 47-0 to pass LB266.

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