Delaware Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
Leveraging the Federal 45F Credit for Delaware Employers
The 2026 Delaware Reality: Federal Only
Delaware does not have a state-level employer child care tax credit. Your opportunity is the federal Section 45F credit.
⚠️ Important Clarification
Delaware has NO employer child care tax credit. If you've seen claims of a "Delaware Employer Child Care Credit" with a 50% rate or $100,000 cap, this is incorrect. Delaware only offers a credit for individuals (parents)—not employers. HB 274 (introduced Jan 2026) would increase the individual credit, but this benefits employees, not the business.
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
No state employer credit exists. Delaware is a "Federal Only" state for employer child care tax benefits.
💡 Delaware Alternative: Purchase of Care (POC) Subsidies
While not a tax credit, Delaware's Purchase of Care (POC) subsidy system can help your lower-wage employees afford child care. Employers can facilitate POC applications for eligible employees, effectively reducing their child care burden at no cost to the company. This is the main "state benefit" available.
🏢 Niche Opportunity: Historic Preservation Tax Credit
If you're renovating an older building in a downtown district to create a child care center, you might qualify for the Delaware Historic Preservation Tax Credit (20-30% of rehab costs). This is competitive and niche, but it's the only applicable state tax credit for facility construction in Delaware.
💡 Delaware Strategy
Focus 100% on the federal Section 45F credit. There is no state credit to "stack." The federal credit alone can cover 40-50% of your qualified child care expenditures. Help employees apply for POC subsidies to maximize the overall benefit package.
Delaware-Specific Example: The "Corporate HQ" Scenario
A financial services company in Wilmington with 150 employees (qualifying as a Small Business) partners with a local child care center to offer subsidized spots to its employees.
| Expense Category | Annual Investment | Federal 45F Credit (50%) |
|---|---|---|
| Employee Tuition Subsidies | $120,000 | $60,000 |
| Child Care Referral Service | $10,000 | $1,000 (10% rate) |
| Total | $130,000 | $61,000 |
💎 The Delaware Advantage
Even without a state credit, the federal 45F credit provides a dollar-for-dollar reduction in the company's federal tax liability. This makes offering a premium child care benefit highly attractive for attracting and retaining top talent in Delaware's competitive corporate environment.
Delaware Compliance & Resources
📋 Licensing Requirements
All child care programs must be licensed by the Delaware Office of Child Care Licensing (OCCL). This ensures providers meet state standards for health, safety, and quality.
DE Office of Child Care Licensing →🏛️ State Advocacy
The Delaware State Chamber of Commerce is a key advocate for business-friendly policies and is actively involved in discussions around future child care solutions and incentives for employers.
Delaware State Chamber of Commerce →📄 Required Federal Form
File IRS Form 8882 with your federal business tax return to claim the Section 45F credit. Ensure you have proper documentation for all qualified expenditures.
IRS Form 8882 →🤝 Local Support
Connect with Children & Families First Delaware, a key resource for child care information and support services across the state, to find qualified local partners.
Children & Families First DE →Delaware Child Care Landscape
Why Delaware Employers Are Focusing on Child Care
In a state known for its corporate headquarters and skilled workforce, access to affordable, high-quality child care is a critical component of economic stability. The federal 45F credit empowers Delaware businesses to address this need directly, improving employee productivity and loyalty.
Employers in these major Delaware areas are prime candidates for leveraging the 45F credit:
- Wilmington – Financial services, legal, and corporate headquarters
- Dover – Government, healthcare, and manufacturing
- Newark – Education, research, and technology
- Middletown / Smyrna – Logistics and growing residential communities
- Sussex County (Georgetown, Seaford) – Agriculture, healthcare, and tourism
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.
Delaware Section 45F FAQ
No. Delaware does not have a state-level employer child care tax credit. If you've seen claims of a "Delaware Employer Child Care Credit" with a 50% rate or $100,000 cap, this is incorrect. Delaware only offers a credit for individuals (parents)—not employers. Delaware is a "Federal Only" state for employer child care benefits.
HB 274, introduced in January 2026, would increase Delaware's individual child care tax credit from 50% to 100% of the federal credit. This benefits your employees (parents), not the employer directly. It's still good news—your employees may have lower out-of-pocket child care costs—but it doesn't create a new employer credit.
Delaware's Purchase of Care (POC) subsidy system helps low-income families afford child care. While not a tax credit, employers can help eligible employees apply for POC, effectively reducing their child care burden at no cost to the company. This is the main "state benefit" employers can facilitate in Delaware.
Potentially. If you're renovating an older building in a downtown district to create a child care center, you might qualify for the Delaware Historic Preservation Tax Credit (20-30% of rehab costs). This is competitive and niche, but it's the only applicable state tax credit for facility construction in Delaware.
Yes. The federal 50% credit for small businesses (under $31M average gross receipts) makes it affordable. Even without a state credit, the federal 45F credit alone can cover half your costs. Small businesses can also form coalitions to pool resources and share costs.
The Delaware Office of Child Care Licensing (OCCL) provides a searchable database of licensed providers. You can also work with Children & Families First Delaware for resource and referral services.
Ready to Calculate Your Delaware Savings?
Use our free calculator to instantly estimate your federal Section 45F tax credit. See how much your Delaware business can save by supporting your employees with child care.