Maryland Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
Federal 45F Credit + Child Care Scholarship (CCS) Strategy
📋 Maryland: No State Credit, But a Better Strategy
Maryland does not have a direct state employer child care tax credit. However, Maryland has one of the highest child care subsidy rates in the nation.
The Smart Move: Don't just pay for care—help your employees access Child Care Scholarship (CCS) funds. The best "tax move" for a Maryland employer is helping their staff get state money!
The 2026 Maryland Strategy
Maryland employers should combine the federal Section 45F credit with strategies to help employees access state subsidies.
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
Help employees access Maryland's generous CCS program. Family of 4 earning $90k+ can qualify. State pays the provider directly!
💰 The Child Care Scholarship (CCS) Advantage
Maryland recently raised the income cap for CCS. A family of 4 earning up to $90,000+ can now qualify!
- What it is: State subsidy paid directly to the child care provider
- Employer Strategy: Pay for a consultant to help employees fill out the CCS application
- The Result: Your employees get state-funded care, you get goodwill, and you can focus your 45F spending on employees who don't qualify for CCS
🎓 Blueprint for Maryland's Future: Pre-K is Going FREE!
Maryland is rolling out universal Pre-K (Tier 1 and Tier 2) under the Blueprint for Maryland's Future.
Strategy: Don't pay for Pre-K—it's becoming free! Focus your child care benefits on infant/toddler care (ages 0-3) and wrap-around services (before/after school, summer care).
💡 Maryland Strategy Summary
Maryland employers should: (1) Claim the federal 45F credit for direct child care expenses, (2) Help employees navigate CCS applications, and (3) Focus benefits on infant/toddler care since Pre-K is becoming free. This three-pronged approach maximizes value for both employer and employees.
Maryland-Specific Example: The "Beltway Employer" Scenario
A government contractor in Bethesda with 200 employees implements a comprehensive child care strategy.
| Strategy | Annual Investment | Federal 45F Credit | Employee Benefit |
|---|---|---|---|
| Infant/Toddler Care Subsidies (25 families) | $250,000 | $100,000 (40%) | Direct care support |
| CCS Application Assistance (50 families) | $25,000 | $0 (not 45F eligible) | ~$500k in state subsidies unlocked! |
| Backup Care Program | $40,000 | $16,000 (40%) | Emergency coverage |
| R&R Agency Contract | $15,000 | $1,500 (10%) | Care navigation |
| Total | $330,000 | $117,500 | Massive ROI! |
🦀 The Maryland Advantage
By combining the federal 45F credit ($117,500) with CCS navigation assistance, this employer unlocked approximately $500,000 in state subsidies for their employees. The $25,000 spent on CCS assistance generated a 20:1 return in employee benefits!
Maryland Compliance & Resources
📋 Licensing Requirements
All child care facilities must be licensed by the Maryland State Department of Education (MSDE). This includes both center-based and family child care homes.
MSDE Child Care Licensing →💰 Child Care Scholarship (CCS)
Maryland's CCS program helps families pay for child care. Income limits recently expanded. Help your employees apply!
CCS Program Information →📄 Required Federal Form
File IRS Form 8882 with your federal business tax return to claim the Section 45F credit. No state form needed (no state credit exists).
IRS Form 8882 →🎓 Blueprint for Maryland's Future
Track the rollout of universal Pre-K in Maryland. Know what's becoming free so you can focus benefits elsewhere.
Blueprint Information →Maryland Child Care Landscape
Maryland recently raised income limits. More employees may qualify than you think!
One of the highest in the nation. CCS and 45F help offset these costs.
Blueprint for Maryland's Future is rolling out universal Pre-K. Focus on 0-3!
Why Maryland Employers Need a Smart Strategy
Maryland's high cost of living and competitive labor market (especially in the DC suburbs) make child care benefits essential. But with CCS expansion and universal Pre-K coming, the smartest employers are navigating the system rather than just writing checks.
- Montgomery County – Federal contractors, biotech, healthcare (highest costs)
- Baltimore City/County – Healthcare, education, finance
- Prince George's County – Federal government, healthcare
- Anne Arundel County – Defense contractors, healthcare, hospitality
- Howard County – Tech, healthcare, retail
- Frederick County – Biotech, manufacturing, agriculture
Qualified Intermediary Platforms for 45F
Maryland employers can maximize the federal 45F credit through intermediary platforms and benefits administrators.
Child Care Marketplace Platforms
Technology platforms that connect employees with vetted, licensed child care providers. Expenses qualify under 45F.
Benefits Administration Services
Third-party administrators that manage employer child care benefits. Administrative fees are now 45F-eligible.
Resource & Referral Agencies
Maryland Family Network and local CCR&Rs help employees find quality child care. Contracts qualify for the 10% referral credit.
CCS Navigation Services
Help employees apply for Child Care Scholarship. Not 45F-eligible, but generates massive ROI in state subsidies!
Maryland Section 45F FAQ
Ready to Calculate Your Maryland Savings?
Use our calculator to estimate your federal Section 45F credit. Remember: the best Maryland strategy combines 45F with CCS navigation!