Mississippi caps tax credits for employers helping pay for care

Eligible employers can claim an income tax credit covering 50% of qualifying child care stipends. The stipend pays for employees' children to receive care during the employees' work hours. The stipend must be at least $2,000 per child and paid directly to a licensed or registered Mississippi care provider. The credit cannot exceed $3,000 per year for each participating employee's child. Credits also fall within the statewide yearly allocation limit. Employers cannot also deduct expenses used to claim the credit. Unused credits may carry forward for five successive years. Any excess remaining afterward cannot be refunded or carried forward. The law took effect July 1, 2026.

Employers claiming stipend credits must certify employee names, payment amounts, and care provider information to the Mississippi Department of Revenue. These requirements cover employers seeking credits for child care stipends. Small family care homes must be approved for the federal child and adult nutrition program. Provider information must include the federal identification number and the license and registration number listed on the State Department of Health Registry. The Mississippi Department of Revenue may require other information to verify that payments support eligible care. For programs serving children age 12 or younger or elderly adults, the facility must be licensed or registered with the State Department of Health when paid directly. The Department of Revenue handles programs serving other dependents older than 12. Eligible facilities include licensed programs averaging at least six children age 12 or younger, approved family care homes serving five or fewer children or elderly adults, and community or workplace facilities serving children ages 13–17, employees' adult relatives, or dependents with disabilities. The law took effect July 1, 2026.

The Mississippi Department of Revenue can allocate no more than $1 million in covered credits each calendar year. The ceiling covers employer dependent-care credits under this section, including child care stipend credits. The law took effect July 1, 2026.