Does Georgia have its own employer child care tax credit?

Yes, Georgia has a very generous tax credit for employers who provide child care for their employees. It covers 75% of the operating costs of a child care facility and 100% of the cost of purchasing, constructing, or renovating a facility (spread over 10 years).

What is the limit on the Georgia child care credit?

The Georgia employer child care credit is limited to 50% of the employer's total Georgia income tax liability for the year.

Georgia Child Care Tax Incentives

Current for 2026 Tax Year • Last Updated: January 24, 2026

Strategic 45F stacking for Georgia employers and Small Business Coalitions

The 2026 Georgia "Stack" (Updated for HB 136)

Georgia employers can achieve a "Triple Win" by combining the expanded federal Section 45F credit with the state's newly enhanced child care credit under HB 136 (signed May 2025).

40-50% Federal Section 45F Credit

Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.

90-100% Georgia Employer's Credit for Child Care

Updated 2026: Georgia now offers 90% of operating costs (up from 75%) plus 100% of property purchase costs (amortized 10%/year for 10 years).

🎉 HB 136 Update (Effective Jan 1, 2025)

The "Working for Georgia" legislative package increased the operating cost credit from 75% to 90%, making Georgia arguably the most lucrative state credit in the country.

🏆 The "Pass-Through" Gold Mine

Unlike Florida or Alaska, Georgia explicitly allows these credits to pass through to personal income tax for S-Corp shareholders, LLC members, and partners.

Example: If your LLC spends $50,000 on child care, you can personally use the $45,000 state credit (90%) to offset your personal Georgia income tax bill. This makes the credit valuable to almost every small business owner—not just C-Corps.

⚠️ The 50% Liability Hard Cap

Critical: The credit can only offset 50% of your total state tax liability in any given year.

Example: If you generate a $100,000 credit but only owe $20,000 in Georgia taxes, you can only use $10,000 (50% of liability) that year.

Good News: Unused credits can be carried forward for 5 years.

💡 Georgia Strategy: "Sponsor" vs. "Buy Spots"

Smart employers in Georgia don't just "buy spots"—they sponsor operating costs. By directly paying for the operating costs of a center (salaries, food, supplies—even at a center you don't own, via contract), you trigger the 90% credit. Simple tuition reimbursement may be scrutinized differently under the "sponsoring" definition.

Georgia-Specific Example: The "Manufacturing Growth" Scenario

A manufacturing company in Augusta with 250 employees sponsors operating costs at a nearby child care center.

Expense Category	Annual Investment	Federal 45F (40%)	Georgia Credit (90%)
Sponsored Operating Costs (salaries, food, supplies)	$300,000	$120,000	$270,000
Referral Services (10%)	$10,000	$1,000	$0
Total	$310,000	$121,000	$270,000

📊 Realistic Scenario: The 50% Liability Cap in Action

If this company owes $200,000 in Georgia state taxes, they can only use $100,000 (50%) of the $270,000 credit this year.

Year 1: $100,000 used | Carryforward: $170,000 (usable over next 5 years)

🍑 The Georgia Advantage (Updated for HB 136)

With the 90% state credit (up from 75%), Georgia is now arguably the most lucrative state for employer child care. The key advantages:

Pass-Through Eligible: S-Corps, LLCs, and partnerships can use the credit on personal returns
5-Year Carryforward: Unused credits don't expire immediately
"Sponsor" Strategy: Pay operating costs at ANY licensed center to trigger the 90% credit

Georgia Compliance & Resources

📋 Licensing Requirements

All child care facilities must be licensed by the Georgia Department of Early Care and Learning (DECAL), Community Care Licensing Division. This applies to both center-based and family child care homes.

GA Community Care Licensing Division →

💼 Georgia Competes Tax Credit

The CCTC is administered by the Governor's Office of Business and Economic Development (GO-Biz). Businesses must apply and negotiate credit amounts based on job creation and investment commitments.

DECAL: Child Care Credit →

📄 Required Federal Form

File IRS Form 8882 with your federal business tax return to claim the Section 45F credit. Consult with a tax professional regarding Georgia's "conformity" to federal tax law changes for the 2026 tax year.

IRS Form 8882 →

🤝 Local Support

Employers in Georgia can partner with local Resource & Referral agencies to locate and vet qualified providers. These agencies serve every county in Georgia.

GA Child Care R&R Network →

Georgia Child Care Landscape

58% of Georgians live in a child care desert

$17,000+ average annual cost of infant care in Georgia

1.5M children under 5 in Georgia have working parents

Why Georgia Employers Are Investing in Child Care

Georgia's high cost of living and competitive labor market make child care benefits a powerful recruitment and retention tool. With the enhanced Section 45F credit now covering up to 50% of costs, Georgia employers can offer meaningful benefits while significantly reducing their net investment.

Employers in these major Georgia metros are leading the way in child care benefits:

Fulton County – Corporate, logistics, and professional services
Gwinnett County – Healthcare, retail, and education
Cobb County – Professional services, healthcare, and retail
DeKalb County – Government, healthcare, and education
Chatham County – Manufacturing, port-related industries, and healthcare
Augusta-Richmond County – Cybersecurity, military, and healthcare
Clayton County – Logistics, aviation, and healthcare
Cherokee County – Education, healthcare, and manufacturing

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.

💡 Key Insight: The 2026 OBBBA expansion specifically added "intermediary services" and "technology platforms" to the list of qualified expenses, making it easier for employers without on-site facilities to claim substantial credits.

Georgia Section 45F FAQ (Updated for HB 136)

What is the Georgia employer child care tax credit rate for 2026?

Updated: Under HB 136 (signed May 2025), Georgia now offers 90% of operating costs (up from 75%) plus 100% of property purchase/construction costs (amortized 10% per year for 10 years). This is legally known as the "Employer's Credit for Providing or Sponsoring Child Care"—not "Georgia Competes" (which is a different program).

Can my LLC or S-Corp use the Georgia credit on my personal taxes?

Yes—this is Georgia's biggest advantage! Unlike Florida or Alaska, Georgia explicitly allows these credits to pass through to personal income tax for S-Corp shareholders, LLC members, and partners. If your LLC spends $50,000 on child care, you can personally use the $45,000 credit (90%) to offset your personal Georgia income tax bill.

What is the 50% liability cap?

The Georgia credit can only offset 50% of your total state tax liability in any given year. Example: If you generate a $100,000 credit but only owe $20,000 in Georgia taxes, you can only use $10,000 (50% of liability) that year. Good news: Unused credits can be carried forward for 5 years.

What counts as "cost of operation" for the 90% credit?

The 90% credit applies to the "Cost of Operation," which includes: salaries of caregivers, food, and supplies. Smart employers "sponsor" these costs at a licensed center (even one they don't own) via contract, rather than simply reimbursing employee tuition.

Can the Georgia credit be combined with the federal 45F credit?

Yes, employers can claim both the federal Section 45F credit (40-50%) and the Georgia employer child care credit (90%) in the same year. This "stacking" can result in credits exceeding your actual investment—making child care a profit center rather than a cost center.

What are the requirements for a qualifying child care facility in Georgia?

To be eligible for the credit, the child care facility must be licensed by the Georgia Department of Early Care and Learning (DECAL) and meet all state and local regulatory requirements.

Ready to Calculate Your Georgia Savings?

Use our calculator to estimate your federal Section 45F credit. Select "Georgia" in the state dropdown to see state-specific guidance.

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