Supporting Affordable Child Care for Employees

Child Care is Expensive

The U.S. Census Bureau Household Pulse Survey for April 26 – May 8, 2023 found that NJ families pay on average $442 per week for child care (about $22,994 annually).  Families with children under age 5 average about $23,710 annually.

A recent report from the Committee for Economic Development (CED) found that NJ families with children under age 5 that pay for child care have an average income of $188,251 while those with children under age 5 that do not pay for child care have an average income of $122,167.

Child care is an important work support for parents. But, it’s also an important early learning setting for children.  Affordability is an issue for most families, particularly for those with more than one child.

Employers Can Help Make Child Care More Affordable!

• Offering on-site child care. Businesses can receive a federal tax credit equal to 25 percent of expenses for employee child care. The maximum credit allowed per year is capped at $150,000.

• Contracting for child care within the community. Businesses can contract with a licensed child care program (a center or a family child care home) to provide child care for their employees (or subsidize the cost). Like on-site child care, the federal credit is limited to 25 percent of expenses and capped at $150,000.

• Helping families find child care. Businesses can receive a 10 percent federal tax credit for contracting with Child Care Resource & Referral Agencies. Contact your local CCR&R to be connected with child care resource and referral services to help support families to find child care within their budget.

• Offering Employees Tax-Free Payments for Child Care. Employers can set up Dependent Care Assistance Plans, which are flexible spending accounts, that enable employees to set aside up to $5,000 per year in pre-tax salary for child care expenses.

• Tell Your Employees about the Child and Dependent Care Tax Credit (CDCTC). When you send your employees their W-2 at tax time, remind them that if they have children for whom they pay for child care services, that they should claim the CDCTC. Let them know more information is available about the tax credit for parents on the IRS child care web page.

Child Care Subsidies for Low-Wage Earners

Learn More

Low wage earning families may be eligible for child care subsidies, which help low-income parents afford child care. Eligible families can earn up to about 200 percent of the federal poverty level and still potentially qualify for child care assistance. Learn more by contacting your local CCR&R.