Vermont Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
You're paying the 0.44% Child Care Contribution (Act 76). Ensure employees use CCFAP subsidies! Plus Federal 45F credit.
The 2026 Vermont Reality: Act 76
⚠️ You're Already Paying for Child Care!
Act 76 (2023/2024) implemented a 0.44% payroll tax on Vermont employers specifically to fund child care. This is the "Child Care Contribution."
Your Strategy: Since you're paying the tax anyway, ensure your employees are utilizing the CCFAP subsidies that your taxes are funding!
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses beyond what the state covers.
You're already paying this! Make sure employees access CCFAP subsidies funded by this tax.
💰 CCFAP: The Benefit You're Funding
The Child Care Financial Assistance Program (CCFAP) now covers families earning up to 575% of the Federal Poverty Level (approximately $170,000/year for a family of four).
This means: Most of your middle-income employees likely qualify for subsidized child care. Help them apply!
📋 The Vermont Strategy
| The "Stick": | You're paying the 0.44% Child Care Contribution (no choice) |
| The "Carrot": | Ensure employees utilize CCFAP subsidies your taxes fund |
| The "Bonus": | Use Federal 45F for any additional investments (stipends, backup care, facilities) |
🏂 Vermont Success Story: Burton Snowboards (Burlington)
The Vermont Icon That Built Retention on Child Care
The Burton Model
- The Company: Burton Snowboards, the iconic snowboard manufacturer headquartered in Burlington
- The Solution: On-site child care center operating for decades
- The Culture: New parents can bring infants to work; high-quality center for toddlers
- The Impact: Cited as their #1 tool for retaining talent in Burlington
💡 The Lesson
"Burton built their brand on 'Riding is for Everyone,' but their retention is built on child care. Use the Federal 45F Credit to offset the costs of your own on-site program."
🐕 Dogs AND Babies
Burton is famous for allowing dogs in the office. But they're equally famous for their family-friendly policies. The on-site child care center is a core part of the "Burton Way."
Vermont Grant Landscape
Vermont is a "Grant State" for child care infrastructure. Here's where to find funding:
🌱 Make Way for Kids Grants
Administered by Let's Grow Kids. Provides technical assistance and grants for creating new child care spaces.
Pro Tip: Building a center? Apply for this grant to cover startup costs in addition to using Federal 45F!
Let's Grow Kids →💵 CCFAP (Child Care Financial Assistance)
Help your employees apply! Covers families up to 575% FPL (~$170k/year). Your payroll taxes fund this.
CCFAP Info →🏛️ Vermont Competes Tax Credit
For businesses making significant investments in Vermont. Child care infrastructure can be part of your job creation commitment.
Vermont Competes →📄 Federal Form 8882
File IRS Form 8882 to claim the federal Section 45F credit on your child care expenses.
IRS Form 8882 →Vermont-Specific Example: The "CCFAP Navigator" Strategy
A Burlington employer maximizes the value of the payroll tax they're already paying.
| Strategy Component | Annual Cost | 45F Credit | Net Cost |
|---|---|---|---|
| 0.44% Payroll Tax (on $5M payroll) | $22,000 | N/A (mandatory) | $22,000 |
| CCFAP Navigator Service (help employees apply) | $5,000 | -$2,500 | $2,500 |
| Gap Stipends (for employees above 575% FPL) | $30,000 | -$15,000 | $15,000 |
| Backup Care Subscription | $10,000 | -$5,000 | $5,000 |
| Total Annual Investment | $67,000 | -$22,500 | $44,500 |
💰 The Vermont Advantage
You're paying the payroll tax anyway. By adding $45k in strategic investments (navigator + stipends + backup care), you get $22.5k back via Federal 45F, making your total "new" cost only $22.5k for a comprehensive child care benefit!
Vermont Compliance & Resources
📋 Child Care Licensing
All child care facilities must be licensed by the Vermont Department for Children and Families (DCF).
DCF Licensing →🔍 Bright Futures Information System
Search for licensed child care providers in Vermont through the state's official database.
Provider Search →🌱 Let's Grow Kids
Vermont's leading child care advocacy organization. Resources for employers, grants, and technical assistance.
Let's Grow Kids →💵 CCFAP Application
Help your employees apply for the Child Care Financial Assistance Program (up to 575% FPL).
CCFAP Info →Vermont Child Care Landscape
Key Vermont Markets
Employers in these Vermont markets are navigating the Act 76 landscape:
- Burlington – Tech, healthcare, education, manufacturing (Burton!)
- South Burlington – Retail, healthcare, professional services
- Montpelier – Government, insurance, professional services
- Rutland – Healthcare, manufacturing, retail
- Barre – Granite industry, manufacturing, healthcare
- Brattleboro – Healthcare, education, arts
Vermont Section 45F FAQ
Ready to Maximize Your Vermont Investment?
You're paying the 0.44% payroll tax. Use our calculator to estimate your Federal 45F savings on additional child care investments!