HB358 is a legislative bill aimed at enhancing childcare and workforce development in Alabama by introducing tax credits and grants to support childcare providers and employers. The bill establishes an employer tax credit, which allows employers to claim 75% of eligible expenses for childcare, with small businesses (fewer than 25 employees) able to claim 100%. The credit is capped at $15 million for 2025, increasing to $20 million by 2027. Additionally, childcare providers can receive a tax credit ranging from $1,000 to $2,000 per eligible child, capped at $5 million per year. Nonprofit childcare providers may also be granted up to $50,000, with a total grant funding of $5 million annually. The bill requires documentation for these credits and grants, and failure to provide it results in denial. At least 25% of the tax credits and grants are reserved for small businesses and entities in rural areas, with provisions for reallocation if not used timely.

The bill also ensures that the employer tax credit and the facility tax credit do not adversely affect the Alabama Special Mental Health Trust Fund by using unencumbered funds to protect the fund. Tax credits are non-transferable and must be claimed using forms prescribed by the Department of Revenue, while grants require forms from the Department of Human Resources. The bill emphasizes that the state does not assume any company's debt or allow its credit to support any company, and taxpayers must strictly comply with the bill's provisions to receive benefits. The act is set to become effective on January 1, 2025, and the Senate passed the bill on May 7, 2024.