Virginia Child Care Tax Incentives
Current for 2026 Tax Year • Last Updated: January 24, 2026
Use the 65% EISTC Scholarship Credit for Pre-K! Watch HB 403 (50% credit) and HB 1771 (Tri-Share) for 2027!
The 2026 Virginia Reality: A "Gap Year"
⚠️ Legislative Alert: Virginia is in Transition
The old "Child Day-Care Facility Investment Tax Credit" (§ 58.1-439.4) is dormant/expired. New legislation is pending for 2027.
Your 2026 Strategy: Use the EISTC (65% credit) + Federal 45F, and structure your benefits NOW so you're ready when the new laws pass!
Claim a tax credit for 40% (Large Business) or 50% (Small Business) of qualified child care expenses.
Donate to Pre-K scholarship foundations and get 65% back as a state tax credit!
🎓 The EISTC "Hack" for Child Care
The Education Improvement Scholarships Tax Credit (EISTC) offers a 65% state tax credit for donations to scholarship foundations.
The Hack: While typically for K-12, this credit applies to Non-Public Pre-Kindergarten programs (ages 3-4) for low-income families!
The Math: Donate $10,000 → Get $6,500 state credit + federal deduction → Net cost often less than $1,000!
📋 2026 Legislative Watch
| HB 403: | 50% Refundable Employer Credit (up to $500k) - If passed, Virginia becomes "Top Tier" for 2027! |
| HB 1771: | Tri-Share Pilot (33/33/33 cost-sharing) - Structure stipends NOW to be ready! |
| HB 1412: | Attempting to revive the old Investment Credit for 2027 |
🏥 Virginia Success Story: Bon Secours (Richmond)
The "Portfolio Approach" to Healthcare Child Care
The Bon Secours Model
- The Facility: Family Center at St. Mary's - one of the few hospital-based on-site centers in the region
- The Hours: Designed for healthcare schedules with early drop-offs to accommodate 12-hour shifts
- The Reality: Even with on-site care, demand is high and waitlists exist
- The Solution: Partner with Bright Horizons for backup care (like Capital One does in McLean)
💡 The "Portfolio Approach"
"Bon Secours proves that a 'Portfolio Approach' works best. They built a center for the core staff and use Backup Care for the rest. You can use the Federal 45F Credit to offset the costs of both."
🏢 Capital One (McLean) Also Uses This Model
Capital One in McLean partners with Bright Horizons for backup care, proving this model works for both healthcare AND tech employers in Virginia.
The 65% EISTC Strategy
How to use the Education Improvement Scholarships Tax Credit for child care:
1️⃣ Find a Scholarship Foundation
Identify a scholarship foundation that funds Non-Public Pre-K programs (ages 3-4) for low-income families.
2️⃣ Make a Donation
Donate to the foundation. Your donation funds Pre-K scholarships for children in your community.
3️⃣ Claim 65% State Credit
File for the EISTC and receive a 65% state tax credit on your donation.
4️⃣ Claim Federal Deduction
The remaining 35% is a charitable donation, which you can deduct federally, reducing your net cost even further.
📊 EISTC Math Example
| Donation to Pre-K Scholarship Foundation: | $50,000 |
| Virginia EISTC Credit (65%): | -$32,500 |
| Federal Deduction Value (~25%): | -$12,500 |
| Net Cost: | $5,000 |
Result: $50,000 in Pre-K scholarships for just $5,000 net cost (10 cents on the dollar)!
Virginia-Specific Example: The "Portfolio + EISTC" Strategy
A Northern Virginia tech company combines multiple strategies for maximum impact.
| Strategy Component | Annual Cost | Credits/Deductions | Net Cost |
|---|---|---|---|
| EISTC Donation (Pre-K Scholarships) | $25,000 | -$22,500 (65% + fed) | $2,500 |
| Employee Stipends ($300/mo × 30 employees) | $108,000 | -$54,000 (45F 50%) | $54,000 |
| Bright Horizons Backup Care Subscription | $15,000 | -$7,500 (45F 50%) | $7,500 |
| Resource & Referral Services | $5,000 | -$2,500 (45F 50%) | $2,500 |
| Total Annual Investment | $153,000 | -$86,500 | $66,500 |
💰 The Virginia Advantage
Total Investment: $153,000 | Total Credits: $86,500 | Net Cost: $66,500
That's 57% off your total investment! And if HB 403 passes, you'll save even more in 2027!
Virginia Compliance & Resources
📋 Child Care Licensing (VDOE)
Child care licensing transferred to the Virginia Department of Education (VDOE). All facilities must be licensed.
VDOE Child Care →🔍 Find Licensed Providers
Search for licensed child care providers in Virginia through the state's official database.
Provider Search →🎓 EISTC Information
Learn more about the Education Improvement Scholarships Tax Credit and approved scholarship foundations.
EISTC Info →📄 Federal Form 8882
File IRS Form 8882 to claim the federal Section 45F credit on your child care expenses.
IRS Form 8882 →Virginia Child Care Landscape
Key Virginia Markets
Employers in these Virginia markets are navigating the transition:
- Northern Virginia (NoVA) – Tech, government contractors, consulting (Capital One, AWS)
- Richmond – Healthcare, finance, government (Bon Secours, Dominion Energy)
- Virginia Beach-Norfolk – Military, healthcare, tourism
- Charlottesville – Education (UVA), healthcare, tech startups
- Roanoke – Healthcare, manufacturing, transportation
- Hampton Roads – Shipbuilding, military, logistics (Newport News Shipbuilding)
Virginia Section 45F FAQ
Ready to Navigate Virginia's "Gap Year"?
Use our calculator to estimate your Federal 45F savings. Combine with EISTC for maximum impact while waiting for HB 403!