Montana Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
25% State Credit (Form DCAC) + Federal 45F + Family Forward Grants!
✅ Montana Has a State Credit!
Unlike what some guides claim, Montana is NOT "Federal Only". The Dependent Care Assistance Credit (Form DCAC) provides a 25% state credit on stipends/subsidies—and it stacks with federal 45F!
The 2026 Montana "Stack"
Montana employers combine the federal Section 45F credit with the state's Dependent Care Assistance Credit (Form DCAC) for powerful savings on child care stipends.
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
25% state credit on dependent care assistance (stipends/subsidies) up to $1,575 per employee.
⚠️ The "Facility" Trap
Be careful: The state credit for acquiring a facility often applies to those operating before 2006. Focus on the Assistance (Stipend) portion via Form DCAC, which is active and valuable for 2026. Consult a CPA for your specific situation.
💡 Montana Strategy
If an employer gives a $5,000 stipend, they can potentially get: ~$2,500 (Federal 50%) + ~$1,250 (State 25%) = approximately 75% off! The exact interaction depends on your tax situation—consult a CPA on the "double dipping" rules.
🏔️ Family Forward Montana (Zero to Five)
Montana is solving child care through Public-Private Partnerships and Grants, not just tax credits. Family Forward Montana (an initiative of Zero to Five Montana) is the central hub for employer solutions.
| Family Forward Montana Resources | Description |
|---|---|
| Employer-Sponsored Child Care Grants | Cohorts 1 & 2 have deployed cash grants to Montana employers |
| Consulting Services | Free guidance on implementing child care benefits |
| Best Practices Library | Case studies from Montana employers who've succeeded |
🚀 Get Started with Family Forward
Direct your HR team to Zero to Five Montana. This is where the actual cash funding is happening!
Montana Success Stories
Real Montana employers using Form DCAC + Family Forward grants to solve child care.
💻 Case Study: AdvicePay (Bozeman)
AdvicePay is a FinTech company in Bozeman and a "Family Forward" grantee.
- Model: Child Care Benefit offering tuition assistance (stipends)
- Why it works: Tech companies in Bozeman don't need to build a center—they use stipends + state grants
- Tax Strategy: Stipends qualify for both Form DCAC (25%) and Federal 45F (50%)
🏥 Case Study: Alpine Physical Therapy (Missoula)
Alpine Physical Therapy utilized grant funding to sponsor a Dependent Care Assistance Program (DCAP) for their staff.
- Model: Tax-advantaged DCAP that saves employees money
- Why it works: Even smaller healthcare practices can compete for talent
- The Pitch: "Alpine PT used state resources to set up a DCAP—you can too!"
Montana-Specific Example: The "Stipend Stack" Scenario
A tech company in Bozeman with 50 employees offers $5,000 child care stipends to 10 employees.
| Cost Component | Amount | Credit/Savings |
|---|---|---|
| Total Stipends (10 × $5,000) | $50,000 | — |
| Federal 45F Credit (50%) | — | -$25,000 |
| Montana Form DCAC (25%) | — | -$12,500 |
| Net Cost to Employer | $12,500 | 75% off! |
🏔️ The Montana Advantage
By stacking Form DCAC (25%) with Federal 45F (50%), your net cost is just 25% of total stipend investment! You provide $50,000 in child care benefits for just $12,500 out of pocket. Note: Consult a CPA on exact credit interactions.
Montana Compliance & Resources
📋 Form DCAC (State Credit)
File Form DCAC with your Montana state return to claim the 25% Dependent Care Assistance Credit on stipends/subsidies.
Montana Department of Revenue →🏔️ Family Forward Montana
The central hub for employer child care solutions. Apply for grants and get free consulting.
Zero to Five Montana →📋 Licensing Requirements
All child care facilities must be licensed by the Montana Department of Public Health and Human Services.
MT Child Care Licensing →Montana Child Care Landscape
On stipends/subsidies up to $1,575/employee.
Rural areas face severe shortages.
Stipends are critical for working families.
Why Montana Employers Are Investing in Child Care
Montana's competitive labor market—especially in tech hubs like Bozeman—makes child care benefits a powerful recruitment tool. With Form DCAC + Federal 45F, employers can offer meaningful stipends at minimal net cost.
- Bozeman – Technology, tourism, education (AdvicePay model!)
- Missoula – Healthcare, education, retail (Alpine PT model!)
- Billings – Healthcare, energy, transportation
- Great Falls – Agriculture, military, healthcare
- Helena – Government, healthcare
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.
Montana Child Care Tax Credit FAQ
Form DCAC is the Montana Dependent Care Assistance Credit. Employers can claim a 25% tax credit on amounts paid for dependent care assistance (stipends/subsidies) up to $1,575 per employee. This stacks with the federal 45F credit!
Family Forward Montana (an initiative of Zero to Five Montana) is the central hub for employer child care solutions. They deploy Employer-Sponsored Child Care Grants (Cohorts 1 & 2) and provide free consulting. Visit zerotofive.org to learn more.
Yes! If you give a $5,000 stipend, you can potentially get ~$2,500 (Federal 50%) + ~$1,250 (State 25%) = approximately 75% off! The exact interaction depends on your tax situation—consult a CPA on the "double dipping" rules.
Be careful: The state credit for acquiring a facility often applies to those operating before 2006. Focus on the Assistance (Stipend) portion via Form DCAC, which is active and valuable for 2026.
AdvicePay is a FinTech company in Bozeman and a "Family Forward" grantee. They implemented a Child Care Benefit offering tuition assistance (stipends). They didn't build a center—they used stipends + state grants. Their stipends qualify for both Form DCAC (25%) and Federal 45F (50%).
Yes! Alpine Physical Therapy (Missoula) utilized grant funding to sponsor a Dependent Care Assistance Program (DCAP) for their staff. Even smaller practices can compete for talent using state resources.
Calculate Your Potential Montana Credit
Use our free calculator to estimate your potential federal + state tax savings. See how Form DCAC + 45F can reduce your net cost to just 25%!
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