Kansas Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
Strategic 45F stacking for Kansas employers and Small Business Coalitions
The 2026 Kansas "Stack"
Kansas employers can achieve a powerful "Double Win" by combining the expanded federal Section 45F credit with the state's REFUNDABLE child care credit (K.S.A. 79-32,190).
🌟 Kansas Gold: REFUNDABLE Credit
The Kansas credit is refundable—if the credit exceeds your state tax liability, you get the difference as a cash refund. This is the single most important feature for small businesses and distinguishes Kansas from almost every other state!
🏦 HB 2237: Banks Now Qualify!
Recent legislation (HB 2237) expanded eligibility to financial institutions (banks, savings & loans) that pay the "Privilege Tax" instead of income tax. Community banks are often the pillars of small Kansas towns—this is a huge unlock for rural child care funding!
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
50% for establishing a facility or paying an intermediary (cap: $45,000). 30% for operating costs or purchasing care (cap: $30,000).
💰 The 50% vs 30% Strategy: "Locating Service" Loophole
You get 30% for paying a provider directly. But you get 50% for payments to an "organization providing access to available child care services" (like a Resource & Referral agency or tech platform).
Strategy: If you pay a platform to manage the subsidy, you might qualify for the 50% "Location Service" tier rather than the 30% "Purchase" tier. Consult your tax advisor!
⚠️ December 31, 2021 Cutoff
The 50% credit for establishing a facility applies only to facilities established after December 31, 2021. If you're renovating a facility built before 2022, you may only qualify for the operating credit (30%), not the establishment credit (50%).
💡 Kansas Strategy
The combination of a 50% federal credit and a 50% state credit for facility construction can make building an on-site child care center nearly cost-neutral for small businesses in Kansas. The refundable nature of the Kansas credit means you get cash back even if you have no state tax liability!
Kansas-Specific Example: The "Manufacturing Consortium" Scenario
A consortium of three small manufacturing companies in Wichita (each with 75 employees) jointly invests in building a new on-site child care facility for their employees.
| Expense Category | Annual Investment | Federal 45F Credit (50%) | Kansas State Credit (50%) |
|---|---|---|---|
| Facility Construction & Equipment | $250,000 | $125,000 | $45,000 (Max) |
| First-Year Operating Costs | $100,000 | $50,000 | $0 |
| Total | $350,000 | $175,000 | $45,000 |
🌻 The Kansas Advantage
The combined federal and state credits cover $220,000 of the $350,000 first-year investment, a 63% total credit rate. The Kansas credit is also refundable, meaning the businesses receive the full credit amount as a refund even if their state tax liability is less than the credit. This makes child care investments incredibly accessible for Kansas businesses.
Kansas Compliance & Resources
📋 Licensing Requirements
All child care facilities must be licensed by the Kansas Department of Health and Environment (KDHE). This applies to both center-based and family child care homes.
KDHE Child Care Licensing →💰 Kansas Child Care Credit
The Kansas employer child care credit is detailed in statute § 79-32,190. The credit is refundable and subject to a $3 million statewide annual cap.
Read the Statute →📄 Required Federal Form
File IRS Form 8882 with your federal business tax return to claim the Section 45F credit. Consult with a tax professional for guidance on stacking federal and state credits.
IRS Form 8882 →🤝 Local Support
Child Care Aware of Kansas provides resources and support for employers looking to implement child care solutions, including information on tax credits and finding local partners.
Child Care Aware of Kansas →Kansas Child Care Landscape
Kansas is home to approximately 218,000 children under the age of 6, with 67% of them living in households where all parents are in the workforce.
The average annual cost of center-based infant care in Kansas is $8,630, posing a significant financial burden on working families.
While the number of licensed child care programs increased slightly in 2023, many counties in Kansas are still considered "child care deserts" with limited options.
✈️ Aviation Alley: Wichita's Child Care Advantage
Wichita is the "Air Capital of the World." Major players like Textron Aviation have set the standard with tuition discounts and backup care. Small machine shops and suppliers in the aviation supply chain can now use the refundable K-56 credit to offer competitive benefits without the massive overhead. If Textron can do it, so can you!
🏦 The Rural Bank Strategy
Thanks to HB 2237, community banks paying the Privilege Tax are now fully eligible for the Kansas child care credit. This is a game-changer for rural Kansas towns where the local bank is often the largest employer. Bank presidents: you can now claim this credit against your Privilege Tax!
Major Markets & Employer Impact
Access to affordable, quality child care is a critical workforce issue in Kansas's major economic hubs. Employers in these areas can leverage tax credits to support their employees and attract talent.
- Wichita – Aviation, manufacturing ("Air Capital of the World")
- Overland Park – Corporate headquarters, tech
- Kansas City (KS) – Logistics, manufacturing
- Topeka – Government, healthcare
- Olathe – Tech, healthcare
- Lawrence – Education, healthcare
- Rural Kansas – Agriculture, community banks (HB 2237!)
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.
Frequently Asked Questions (Kansas)
Yes! The Kansas Employer Child Care Credit is refundable. This means that if the amount of the credit exceeds your state tax liability, you will receive the difference as a cash refund. This is the single most important feature for small businesses and distinguishes Kansas from almost every other state!
Yes! Thanks to HB 2237, financial institutions (banks, savings & loans) that pay the "Privilege Tax" instead of income tax are now fully eligible. This is a game-changer for rural Kansas towns where the local bank is often the largest employer.
You get 50% for establishing a facility or paying an "organization providing access to available child care services" (like a Resource & Referral agency or tech platform). You get 30% for operating costs or paying a provider directly. Strategy tip: If you pay a platform to manage the subsidy, you might qualify for the 50% tier!
The Kansas credit is capped at $45,000 per year for establishing a facility (50% tier) and $30,000 for operating/purchasing care (30% tier). There is also a statewide cap of $3 million per year on total credits awarded.
The 50% credit for establishing a facility applies only to facilities established after December 31, 2021. If you're renovating a facility built before 2022, you may only qualify for the operating credit (30%), not the establishment credit (50%).
Yes, you can generally claim both credits for the same qualified expenditures. The federal credit reduces your federal tax liability, and the Kansas credit reduces your state tax liability (or provides a refund!). Stacking these credits can dramatically lower the net cost of your child care investment.
Calculate Your Potential Savings
Use our free, updated 2026 tax credit calculator to estimate your potential savings from the federal Section 45F credit and Kansas state incentives.
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