Rhode Island Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
30% State Credit (RIGL § 44-47) + Federal 45F = Up to 80% Savings!
The 2026 Rhode Island "Stack"
Rhode Island offers a 30% state tax credit that stacks with the federal 45F credit. Small state, big savings!
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
30% credit on child care expenditures, capped at $30,000/year. 5-year carryforward. Covers tuition, facilities, and donations!
✅ Rhode Island HAS a State Credit!
The Child Day Care Assistance and Development Tax Credit (RIGL § 44-47) provides a 30% credit on eligible child care expenditures. This has been on the books for years—don't miss it!
📋 Eligible Expenses for RI 30% Credit
- Purchase of Services: Tuition subsidies for employees
- Establishment/Operation: Building or running a child care center
- Real Estate Donations: Contributing property for child care use
💡 5-Year Carryforward
If you can't use the full $30,000 credit in the current year, you can carry it forward for up to 5 years. This is great for businesses with fluctuating tax liability!
Rhode Island-Specific Example: The "80% Savings" Scenario
A small manufacturing company in Providence with 100 employees invests in child care benefits.
| Expense Category | Annual Investment | Federal 45F (50%) | RI State (30%) |
|---|---|---|---|
| Child Care Subsidies | $80,000 | $40,000 | $24,000 |
| Backup Care Program | $20,000 | $10,000 | $6,000 |
| Total | $100,000 | $50,000 | $30,000 (capped) |
💰 The Rhode Island Advantage
Total Investment: $100,000 | Federal Credit: $50,000 | State Credit: $30,000 | Net Cost: $20,000
That's 80% of your child care investment covered by tax credits!
🎮 RI Success Story: Hasbro (Pawtucket)
The Toy Giant That Understands Play AND Child Care
The Hasbro Model
- On-Site Care: Hasbro has long offered on-site child care at their Pawtucket headquarters
- Tax Strategy: They use the RI 30% Credit to offset operational costs
- The Logic: "You can't design toys if you're worried about your kids"
- Retention Impact: A key differentiator in attracting creative talent
💡 The Lesson
"Hasbro understands that creativity requires peace of mind. Their on-site center isn't just a perk—it's a strategic investment in innovation. The RI 30% credit makes it financially viable for companies of all sizes."
💊 RI Strategy: CVS Health Backup Care Model (Woonsocket)
You Don't Need to Build a Center—Backup Care Works Too!
The CVS Approach
- Backup Care: CVS Health offers backup child care for when regular arrangements fall through
- School Holidays: Coverage during teacher workdays, snow days, and summer breaks
- Sick Child Care: Options when kids are too sick for regular daycare but parents can't miss work
- Tax Benefit: Backup care subscriptions qualify for both federal and state credits
💡 Small Business Application
"You don't need to be CVS to offer backup care. Small RI businesses can use the state credit to buy 'Backup Care Packages' for their staff during school holidays. A $10,000 backup care subscription costs you only $2,000 after credits!"
Rhode Island Compliance & Resources
📋 RI State Credit (§ 44-47)
30% credit, $30k cap, 5-year carryforward. File with your RI business tax return.
RI Division of Taxation →📋 Licensing Requirements
All child care facilities must be licensed by the Rhode Island Department of Human Services (DHS).
RI DHS Child Care →🤝 Local Support
Rhode Island KIDS COUNT and local CCR&R agencies can help connect employers with providers.
RI KIDS COUNT →Rhode Island Child Care Landscape
Key Rhode Island Markets
Employers in these Rhode Island markets are leveraging the state + federal stack:
- Providence – Healthcare, education, finance, government
- Warwick – Retail, healthcare, logistics
- Cranston – Manufacturing, healthcare
- Pawtucket – Manufacturing (Hasbro HQ), healthcare
- Woonsocket – Healthcare (CVS HQ), retail
- Newport – Tourism, defense, 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.
Child Care Marketplace Platforms
Technology platforms that connect employees with vetted, licensed child care providers. Subscription fees qualify under 45F.
Benefits Administration Services
Third-party administrators that manage employer child care benefits. Administrative fees are now 45F-eligible.
Backup Care Services
Programs like Bright Horizons backup care qualify for both federal 45F and the RI state credit.
Child Care Subsidy Programs
Direct subsidies to employees for licensed care are fully eligible for both federal and state credits.
Rhode Island Section 45F FAQ
Ready to Calculate Your Rhode Island Savings?
Use our calculator to estimate your potential federal 45F savings, then add the 30% Rhode Island state credit for your total benefit. The Ocean State stack can cover up to 80% of your child care investment!