The bill establishes a refundable personal income tax credit of $500 for taxpayers who own a state-licensed family child care home, effective January 1, 2026, and applicable to taxable years commencing on or after that date. This credit is available to individual taxpayers, as well as shareholders or partners of S corporations and partnerships, and owners of single-member limited liability companies (LLCs) that are disregarded for federal tax purposes, provided they are subject to the personal income tax. If the credit exceeds the taxpayer's tax liability, the Commissioner of Revenue Services is required to treat the excess as an overpayment and issue a refund without interest.

The bill results in an estimated General Fund revenue loss of approximately $0.9 million annually starting in FY 27, along with a one-time cost of up to $75,000 for necessary updates to the tax administration system. The legislation aims to support family child care home providers, which typically care for small groups of children, thereby promoting child care availability and affordability in the state.