The bill amends Arkansas income tax laws concerning child care by repealing the previous employer-provided child care tax credit and introducing a new income tax credit specifically for licensed childcare providers. Employers can now claim a tax credit for eligible expenses, capped at $500,000 per employer and a total of $15 million for all employers, with $3.75 million reserved for small businesses and those in rural areas. Additionally, licensed childcare providers can receive a credit based on the average monthly number of eligible children enrolled, with a maximum of $25,000 per provider per tax year and a total cap of $5 million annually, including $1.125 million for rural providers.

The bill outlines the application process for these credits, requiring documentation and certification of eligible expenses, and mandates automatic denial of applications that do not meet the requirements. It also allows tax-exempt licensed childcare providers to transfer or sell their credits. The new provisions will take effect for tax years beginning on or after January 1, 2026, and include an emergency clause to ensure timely implementation for the financial stability of the state and to allow for necessary adjustments by taxpayers and employers.

Statutes affected:
Old version HB1435 Original - 2-7-2025 12:00 PM: 6-45-109(b), 20-78-205(d), 26-51-507, 26-52-401, 26-52-401(29), 26-51-508, 26-53-132, 26-52-516
Old version HB1435 V2 - 2-26-2025 10:37 AM: 6-45-109(b), 20-78-205(d), 02-26-2025, 26-51-507, 26-52-401, 26-52-401(29), 26-51-508, 26-53-132, 26-52-516
Old version HB1435 V3 - 2-27-2025 11:22 AM: 6-45-109(b), 20-78-205(d), 02-27-2025, 26-51-507, 26-52-401, 26-52-401(29), 26-51-508, 26-53-132, 26-52-516
HB 1435: 6-45-109(b), 20-78-205(d), 26-51-507, 26-52-401, 26-52-401(29), 26-51-508, 26-53-132, 26-52-516