The 2026 Connecticut Reality
Connecticut recently quintupled its employer child care tax credit, making it one of the best states for stacking with the federal Section 45F credit.
✅ 2024 Update: Connecticut Quintupled Its Credit
Effective January 1, 2024, the Human Capital Investment Tax Credit (CGS § 12-217x) was expanded from 5% to 25% for child care-related investments, including subsidies paid to employees. Additionally, CGS § 12-634 offers up to 60% (capped at $50,000) for cash invested in operating a licensed, non-profit child care facility for employees.
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
Corporations can claim a credit of 25% of child care subsidies for employees (CGS § 12-217x), or up to 60% for facility investments in a licensed nonprofit center (CGS § 12-634, capped at $50K).
💡 The Real Opportunity: Tri-Share Pilot Program
Connecticut has an active Tri-Share Child Care Pilot Program in New London County, run by the Office of Early Childhood (established under HB 5002). Under this program, child care costs are split:
- 1/3 Employer
- 1/3 Employee
- 1/3 State of Connecticut
This can be combined with the 25% state credit and the federal 45F credit for eligible employers in New London County.
💡 Connecticut Strategy
Connecticut is now one of the best states for stacking. The federal 45F credit (40-50%) combined with the state 25% credit can cover 65-75% of your child care investment. If you're in New London County, explore the Tri-Share Pilot for even greater cost reduction.
Connecticut-Specific Example: The "Insurance Capital" Scenario
An insurance company in Hartford with 350 employees provides child care subsidies to employees through a partnership with local licensed providers.
| Expense Category | Annual Investment | Federal 45F Credit | CT State Credit (25%) |
|---|---|---|---|
| Child Care Subsidies | $200,000 | $80,000 (40%) | $50,000 (25%) |
| Provider Contracts | $100,000 | $40,000 (40%) | $25,000 (25%) |
| Referral Services | $15,000 | $1,500 (10%) | $0 |
| Total | $315,000 | $121,500 | $75,000 |
🏦 The Connecticut Reality
Total Credits: $196,500 (62% of investment). The federal 45F credit provides $121,500, and Connecticut's 25% credit adds a substantial $75,000. This is one of the strongest combined ROIs in the country.
💡 Tri-Share Alternative (New London County)
If this company were located in New London County and eligible for the Tri-Share Pilot, they could potentially reduce costs by 33% (state pays 1/3) in addition to claiming the federal 45F credit on their remaining 1/3 employer share. This could result in even greater savings than the tax credit approach.
Connecticut Compliance & Resources
📋 Licensing Requirements
All child care facilities must be licensed by the Connecticut Office of Early Childhood. This applies to both center-based and family child care homes.
CT Office of Early Childhood →💼 Human Capital Investment Tax Credit
As of January 1, 2024, this credit offers 25% for child care subsidies paid to employees (CGS § 12-217x), expanded from the prior 5% rate. Additionally, CGS § 12-634 offers up to 60% (capped at $50,000) for cash invested in operating a licensed, non-profit child care facility.
CT DRS Information →📄 Required Federal Form
File IRS Form 8882 with your federal business tax return to claim the Section 45F credit. Consult with a tax professional to ensure proper application and compliance for both federal and state credits.
IRS Form 8882 →🤝 Local Support
Employers in Connecticut can use the 2-1-1 Child Care service to find and vet qualified providers across the state.
2-1-1 Child Care →Connecticut Child Care Landscape
Why Connecticut Employers Are Investing in Child Care
Connecticut's competitive business landscape, particularly in finance, insurance, and healthcare, makes employer-supported child care a key differentiator for attracting and retaining top talent. The ability to stack the state's Human Capital Investment Tax Credit with the federal 45F credit provides a strong financial case for making these investments.
Employers in these major Connecticut metros are leading the way in child care benefits:
- Hartford County – Insurance, healthcare, and aerospace
- Fairfield County – Financial services, hedge funds, and corporate headquarters
- New Haven County – Healthcare, education (Yale), and biotech
- Stamford-Norwalk Metro – Corporate HQs, finance, and technology
- Bridgeport – Healthcare, manufacturing, and professional services
Qualified Intermediary Platforms for 45F
Under the One Big Beautiful Bill Act (OBBBA) 2026 updates, employers can now claim Section 45F credits for expenses paid to qualified intermediary service providers. These platforms help connect employees with licensed child care and manage benefits administration.
Child Care Marketplace Platforms
Technology platforms that connect employees with vetted, licensed child care providers. Expenses for subscription fees, matching services, and provider network access qualify under 45F.
Benefits Administration Services
Third-party administrators that manage employer child care benefits, including enrollment, provider payments, and compliance reporting. Administrative fees are now 45F-eligible.
Resource & Referral Agencies
Community-based organizations that help employees find quality child care. Contracts with R&R agencies qualify for the 10% referral credit component.
Child Care Subsidy Programs
Employer-funded subsidy programs that offset employee child care costs. Direct subsidies to employees for licensed care are fully eligible for the 40-50% credit.
Connecticut Section 45F FAQ
As of January 1, 2024, the Human Capital Investment Tax Credit (CGS § 12-217x) provides a credit of 25% of the amount spent on child care subsidies for employees—quintupled from the prior 5% rate. Additionally, CGS § 12-634 offers up to 60% (capped at $50,000) for cash invested in operating a licensed, non-profit child care facility. Both credits stack with the federal 45F credit.
The Tri-Share Child Care Pilot Program is an active program in New London County (established under HB 5002), run by the Office of Early Childhood. Under this program, child care costs are split three ways: 1/3 Employer, 1/3 Employee, 1/3 State. This can be combined with the 25% state credit and the federal 45F credit for eligible employers.
Yes. Yes. You can apply the federal 45F credit (40-50%) to your qualified expenses, and then apply the Connecticut 25% credit to further reduce your tax liability. Together, these credits can cover 62-75% of your child care investment.
Currently, the Tri-Share Pilot is only available to employers with a physical facility in New London County (per HB 5002). If you're located in Hartford, Fairfield, or New Haven counties, you would rely on the 25% state credit plus the federal 45F credit. Check with the Connecticut Office of Early Childhood for updates on program expansion.
The Connecticut Office of Early Childhood maintains a list of licensed providers. You can also use the state's 2-1-1 Child Care service to find providers in your area.