Child care employers and families receive new tax and subsidy rules

Employers may claim tax credits for qualifying child care property and operating costs. The credits apply to employers subject to West Virginia income taxes, and the corporate credit also covers certain tax-exempt nonprofit corporations. The property credit equals 50 percent of qualifying property costs and is claimed over five taxable years. The operating-cost credit equals 50 percent of the employer's operating costs after subtracting employee payments. Credits are limited by the employer's tax liability, and unused credits may be carried forward. Employers must provide required information about the facility, employees, provider, costs, and any credit recapture event. The property credit applies in the year qualifying property is first placed in service and the next four taxable years; the operating-cost credit applies for the taxable year in which costs are incurred. The act states it takes effect July 1, 2026.

The Department of Human Services must pay licensed child care programs based on monthly enrollment and review attendance each quarter. The rules apply to licensed child care programs and parents whose children receive care through those programs. A parent becomes ineligible for the subsidy when the child attends fewer than eight days per month on average. A counted day means four hours in a child care program or 2.5 hours in an out-of-school-time program. The department must use a cost-of-care model to set subsidy amounts. Child care providers seeking department reimbursement must file attendance and supporting documents electronically. The electronic filing system must be in place by July 1, 2026. The department must report the cost-of-care model to the Joint Committee on Health by December 1, 2026.

The Department of Human Services may phase out child care assistance gradually as family income rises. The policies cover families receiving child care assistance and may affect copayments, income limits, and continued eligibility. The department may use larger sliding fee scales, higher exit income limits, graduated benefit reductions, income-based copayments, and temporary eligibility periods. Any rules must follow state and federal law, receive legislative approval, and depend on available funding. The policies must be designed to support employment, wage growth, career advancement, and stable care. The department must report each year on the policies and their effects. The department must implement cliff-mitigation policies by January 1, 2027, and report on them by the first day of each regular legislative session.