Idaho Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
Leveraging the Federal 45F Tax Credit in the Gem State
The 2026 Idaho Federal Credit
While Idaho does not offer a state-level child care tax credit for employers, businesses can fully leverage the powerful federal Section 45F tax credit.
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
Idaho does not currently offer a state-specific employer child care tax credit. Businesses should focus on maximizing the federal 45F credit.
💡 Local Success Story: The Micron Model
Boise-based Micron Technology proves you don't need a state credit to build a world-class program. Their "Hub and Spoke" approach:
- On-Site Center: The "Micron Early Learning Center" (operated by the YMCA) caters to their specific shift schedules
- Off-Site Subsidy: Partnership with TOOTRiS to manage subsidies and backup care for employees who can't use the on-site center
Idaho businesses can replicate this model on a smaller scale using the federal 45F credit.
🎓 Bonus: The IDeal (529) Tax Credit
While there's no child care credit, Idaho offers a 20% state tax credit (up to $500 per employee) for employer contributions to IDeal (529 College Savings) accounts.
Smart Strategy: Offer a "Child Care Subsidy" (Federal 45F) plus a "Future Education Contribution" (State 20% Credit) to maximize total tax savings and employee benefits.
💰 Employee Benefit: $12,000 Child Care Deduction
Idaho increased the child care expense deduction for individuals to $12,000 (retroactive to 2023). Even if you don't pay for care directly, helping employees claim this massive state deduction is a "free" win for retention. Include this in your benefits communications!
💡 Idaho Strategy
Follow the Micron Model: Maximize the federal Section 45F credit with a "Hub and Spoke" approach (on-site + off-site options). Add IDeal 529 contributions for additional state tax savings, and help employees claim their $12,000 child care deduction.
Idaho-Specific Example: The "Manufacturing Growth" Scenario
A manufacturing company in Nampa with 250 employees establishes an on-site child care center to support its growing workforce.
| Expense Category | Annual Investment | Federal 45F Credit (40%) |
|---|---|---|
| Facility Construction/Setup | $300,000 | $120,000 |
| Center Operational Costs | $150,000 | $60,000 |
| Total | $450,000 | $180,000 |
🏔️ The Idaho Advantage
With a significant federal tax credit of $180,000, the company dramatically reduces the net cost of providing a critical benefit that improves employee retention and recruitment in a competitive labor market. This makes the investment in on-site child care far more attainable.
Idaho Compliance & Resources
📋 Licensing Requirements
Child care facilities in Idaho must be licensed by the Idaho Department of Health and Welfare. This ensures that providers meet state standards for safety and quality.
ID Child Care Licensing →📄 Required Federal Form
File IRS Form 8882 with your federal business tax return to claim the Section 45F credit. Always consult with a tax professional to ensure your expenses qualify and you are correctly claiming the credit.
IRS Form 8882 →🤝 Local Support
The Idaho Association for the Education of Young Children (Idaho AEYC) is a key resource for employers, offering guidance on quality child care and promoting the use of federal credits.
Idaho AEYC →Idaho Child Care Landscape
Why Idaho Employers Are Investing in Child Care
Idaho's rapid growth and tight labor market make child care a critical benefit for attracting and retaining talent. With a significant portion of the state classified as a 'child care desert,' employer-supported solutions are essential for workforce stability. The federal 45F credit makes these investments more affordable than ever.
Employers in these major Idaho metros are leading the way in child care benefits:
- Boise Metropolitan Area (Ada & Canyon Counties) – Tech, healthcare, and manufacturing
- Idaho Falls – Nuclear energy, research, and healthcare
- Coeur d'Alene – Tourism, healthcare, and retail
- Pocatello – Education, transportation, and manufacturing
- Twin Falls – Agriculture, food processing, 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.
Idaho Section 45F FAQ
Ready to Calculate Your Idaho 45F Credit?
Use our free calculator to estimate your potential federal tax credit under Section 45F. See how investing in child care can benefit your bottom line.