South Carolina Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
50% State Credit (§ 12-6-3440) + Federal 45F + Tri-Share Pilot Coming!
The 2026 South Carolina "Stack"
South Carolina offers a 50% state tax credit that stacks with the federal 45F credit. Plus, a Tri-Share pilot is on the horizon!
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses, up to $600,000 annually.
50% credit on startup costs (capped at $100k) AND 50% on operating/stipends (capped at $3k/employee).
✅ Current Law: Section 12-6-3440
| Startup (Establishing Facility) | 50% credit, capped at $100,000 |
| Operating/Stipends | 50% credit, capped at $3,000 per employee |
⚠️ Legislative Alert: HB 3692 / SB 47 (Potential 4x Increase!)
Active legislation proposes raising the caps dramatically:
- Startup Cap: $100,000 → $1,000,000
- Per-Employee Cap: $3,000 → $12,000
⚠️ These higher numbers are NOT law yet. Watch for updates in the 2026 session.
🚀 Coming Soon: SC Tri-Share Pilot
Governor McMaster's 2025-2026 Executive Budget includes $1 million to launch a Tri-Share Pilot:
- 33% Employer (You)
- 33% Employee (Parent)
- 33% State (South Carolina)
Strategy: "Prepare now. If you're ready to pay 33%, you might soon be able to offer a 66% subsidy benefit!"
🚐 SC Success Story: Mercedes-Benz Vans (Charleston)
The Gold Standard for Manufacturing Child Care Benefits
The Mercedes-Benz Vans Model
- The Challenge: Retaining skilled shift workers in a tight labor market
- The Benefit: Monthly child care stipend of up to $250 directly to eligible employees
- The Tech: Partnered with TOOTRiS to provide a real-time platform for finding shift-aligned care
- The Result: 40% of eligible employees signed up within the first 30 days!
💡 The Lesson
"You don't need to build a center on the assembly line. MBV proves that a direct financial stipend combined with a search platform (TOOTRiS) drives massive engagement. The stipend qualifies for both the SC 50% credit AND the Federal 45F credit!"
South Carolina-Specific Example: The "Stipend + Platform" Model
A manufacturing company in North Charleston with 200 employees follows the Mercedes-Benz Vans approach.
| Expense Category | Annual Investment | Federal 45F (50%) | SC State (50%) |
|---|---|---|---|
| Child Care Stipends (100 employees × $3,000) | $300,000 | $150,000 | $300,000 (capped at $3k/emp) |
| TOOTRiS Platform Subscription | $25,000 | $12,500 | $12,500 |
| Total | $325,000 | $162,500 | $150,000 (capped) |
💰 The South Carolina Advantage
Total Investment: $325,000 | Federal Credit: $162,500 | State Credit: $150,000 | Net Cost: $12,500
That's 96% of your child care investment covered by tax credits!
Note: State credit is capped at $3,000 per employee. Consult a CPA on stacking rules.
South Carolina Compliance & Resources
📋 SC State Credit (§ 12-6-3440)
50% credit on startup ($100k cap) and operating costs ($3k/employee cap).
SC Department of Revenue →📋 Licensing Requirements
All child care facilities must be licensed by the SC Department of Social Services (DSS).
SC DSS Child Care →South Carolina Child Care Landscape
Key South Carolina Markets
Employers in these South Carolina markets are leveraging the state + federal stack:
- Charleston – Manufacturing (Mercedes-Benz Vans, Boeing), tech, healthcare, tourism
- Columbia – Government, healthcare, education, finance
- Greenville-Spartanburg – Manufacturing (BMW), automotive supply chain
- Myrtle Beach – Tourism, hospitality, healthcare
- Rock Hill – Manufacturing, distribution, healthcare
- North Charleston – Manufacturing, logistics, defense
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—like the TOOTRiS platform used by Mercedes-Benz Vans.
Child Care Marketplace Platforms
Technology platforms like TOOTRiS 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.
Direct Stipend Programs
Monthly stipends to employees for licensed care—the Mercedes-Benz Vans model—qualify for both federal and state credits.
Backup Care Services
Programs that provide care when regular arrangements fall through. Great for shift workers and manufacturers.
South Carolina Section 45F FAQ
Ready to Calculate Your South Carolina Savings?
Use our calculator to estimate your potential federal 45F savings, then add the 50% South Carolina state credit for your total benefit. Follow the Mercedes-Benz Vans model!