HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 635 Child Care and Early Learning Providers
SPONSOR(S): Appropriations Committee, Ways & Means Committee, McFarland
TIED BILLS: IDEN./SIM. BILLS: CS/CS/SB 820
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Ways & Means Committee 22 Y, 0 N, As CS Berg Aldridge
2) Appropriations Committee 28 Y, 0 N, As CS Willson Pridgeon
3) Health & Human Services Committee
SUMMARY ANALYSIS
The bill provides benefits and revises requirements related to child care and early learning providers.
Specifically, the bill:
 Modifies the existing exemptions from special assessments levied by municipalities to include
preschools.
 Provides various tax credits for businesses who operate a child care facility or make payments to child
care facilities on behalf of employees. The credit can be taken against corporate income tax, insurance
premium tax, severance taxes on oil and gas production, alcoholic beverages tax, and sales tax paid by
direct pay permit holders. All credits under this program cannot exceed $5 million per fiscal year.
 Provides an exemption from licensing for certain entities operating a child care facility solely attended
by its employees.
 Modifies requirements related to licensing of child care facilities by the Department of Children and
Families including limitations on violations, implementation of abbreviated inspections, and
requirements regarding background screening.
 Removes annual notifications that child care facilities are required to provide parents regarding
influenza and leaving children in cars.
 Requires county commissions to annually affirm continued services for locally managed licensing of
child care facilities.
 Clarifies cancelation and coverage from residential property insurance for large family child care
homes.
 Makes conforming changes.
The Revenue Estimating Conference (REC) estimated that the bill will have no cash impact on state revenues
in Fiscal Year 2024-25 due to timing provisions of the bill, but will have a -$5 million recurring impact on
General Revenue beginning in FY 2024-25. The REC estimated the impact of the bill on local government
revenues to be -$4.4 million in FY 2024-25 (-$4.4 million recurring).
The bill takes effect on July 1, 2024, except where otherwise specified.
This bill may be a county or municipality mandate requiring a two-thirds vote of the membership of the
House. See Section III.A.1 of the analysis.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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 FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Special Assessments
Present Situation
There are 67 county governments and over 400 municipal governments in Florida. Municipalities levy
and collect special assessments to fund capital improvements and municipal services including but not
limited to: fire protection, emergency medical services, garbage disposal, sewer improvement, street
improvement and parking facilities. Small municipalities with a population fewer than 100 persons may
use special assessments to fund special security and crime prevention services and facilities. 1
Property owned or occupied by a religious institution, a public or private elementary, middle, or high
school, or by a governmentally financed, insured or subsidized housing facility that is used primarily for
persons who are elderly or disabled is exempt from any special assessments levied by a municipality. 2
No specific exemption exists for preschools. There are over 8,500 licensed preschools in Florida.3
Effect of Proposed Changes
The bill exempts any public or private preschool from special assessments levied by municipalities. The
bill defines a preschool as a licensed child care facility serving children under five years of age.
Tax Collections and Credits
Present Situation
Past Corporate Income Tax and Insurance Premium Tax Benefits Related to Child Care
In 1985, the Legislature adopted a deduction from net income for specified “child care facility start-up
costs,” defined as expenditures for playground equipment, kitchen appliances and cooking equipment,
and real property used to establish a child care facility located on the premises or within 5 miles of the
employer’s location, for use exclusively by the employees of the taxpayer.4
In 1998, and effective for 1999 and thereafter, the Legislature replaced the deduction for child care
facility start-up costs with a credit against corporate income tax or insurance premium tax for employers
that opened or operated a child care facility for its employees, or which made child care payments
directly to a child care facility on behalf of employees.5 The credit, codified in ss. 220.19 and 624.5107,
F.S., was for 50 percent of the startup costs, along with $50 per month per child for employer-provided
child care, or 50 percent of child care payments made to independent child care facilities. 6 The total
benefit per corporation was limited to $50,000 per year, and the total credits statewide were capped at
$2 million each year.7 Any credit unused in one year due to insufficient liability could be carried forward
and used in any of the following five years.8
1 Section 170.201, F.S.
2 Section 170.201(2), F.S.
3 Department of Children and Families, Child Care Provider List, 11-1-2023, available at
https://www.myflfamilies.com/sites/default/files/2023-11/Public%20-%202023-11-1%20-%20Statewide.pdf (last visited Jan. 17, 2024).
4 Ch. 85-118, L.O.F.
5 Ch. 98-293, L.O.F.
6 Sections 220.19(2)(a) and 624.5107(2)(a), F.S. (1999)
7 Sections 220.19(2)(b)-(c) and 624.5107(2)(b)-(c), F.S. (1999)
8 Sections 220.19(2)(e) and 624.5107(2)(e), F.S. (1999)
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 If a facility for which a taxpayer received a credit for startup costs ceased operation within the first five
years, a pro rata share of the credit was required to be repaid.9 Eligible child care facilities had to fall
within the statutory definition found in s. 402.302, F.S., and had to be licensed in accordance with s.
402.305, F.S., or had to be a facility providing daily care to children who were mildly ill. 10 The child care
services must have been available to all employees, or allocated on a first-come, first-served basis.11
The Department of Revenue was authorized to adopt rules for the credit program, and was required to
approve or disapprove applications for the program in writing. 12 All approvals required verification by
the Department of Children and Family Services or the local licensing agency that the facility qualified
for the credit program.13
The program expired June 30, 2008,14 other than the section related to carryover of unused tax credits
and the section requiring pro rata repayment if a facility ceased operations within five years, which
remain in statute.15
Corporate Income Tax
Florida imposes a 5.5 percent tax on the taxable income of certain corporations and financial
institutions doing business in Florida.16 Corporate income tax is remitted to the Department of Revenue
(DOR) and distributed to General Revenue. Net collections of corporate income tax in Fiscal Year
2022-2023 were $5.21 billion.17
Insurance Premium Tax
Florida imposes a 1.75 percent tax on most Florida insurance premiums. 18 Insurance premium taxes
are paid by insurance companies under ch. 624, F.S., and are remitted to the DOR. These revenues
are distributed to General Revenue with additional distributions to the Insurance Regulatory Trust Fund,
the Police & Firefighters Premium Tax Trust Fund, and the Emergency Management Preparedness &
Assistance Trust Fund. Net collections of insurance premium taxes in Fiscal Year 2022-2023 were
$1.38 billion with distributions to General Revenue of $1.05 billion. 19
Severance Taxes on Oil and Gas Production
Oil and gas production severance taxes are imposed on persons who sever oil or gas in Florida for
sale, transport, storage, profit, or commercial use.20 These taxes are remitted to the DOR and
distributed to General Revenue with additional distributions to the Minerals Trust Fund and to the
counties where production occurred. Receipts from the severance taxes on oil and gas were $3.2
million in Fiscal Year 2022-2023 with distributions to General Revenue of $2.0 million. 21
9 Sections 220.19(2)(f) and 624.5107(2)(f), F.S. (1999)
10 Sections 220.19(3)(a) and 624.5107(3)(a), F.S. (1999)
11 Sections 220.19(3)(b) and 624.5107(3)(b), F.S. (1999)
12
Sections 220.19(5) and 624.5107(5), F.S. (1999)
13 Sections 220.19(5)(c) and 624.5107(5)(c), F.S. (1999)
14 Sections 220.19(6) and 624.5107(6), F.S. (1999)
15 Sections 220.19 and 624.5107, F.S.
16 Sections 220.11(2) and 220.63(2), F.S.
17 Office of Economic and Demographic Research, Memo, July 31, 2023, availab le at
http://edr.state.fl.us/Content/conferences/generalrevenue/CITNetCollections_FY2022 -23.pdf (last visited Jan 18, 2024).
18 Section 624.509, F.S. (Different tax rates apply to wet marine and transportation insurance, self-insurance, and annuity premiums.)
19 Florida Revenue Estimating Conference, 2023 Florida Tax Handb ook (Oct. 2023), p. 117, availab le at
http://edr.state.fl.us/content/revenues/reports/tax-handbook/taxhandbook2023.pdf (last visited Jan. 18, 2024).
20 Sections 211.02(1) and 211.025, F.S.
21 Florida Revenue Estimating Conference, 2023 Florida Tax Handb ook (Oct. 2023), p. 185, availab le at
http://edr.state.fl.us/content/revenues/reports/tax-handbook/taxhandbook2023.pdf (last visited Jan. 18, 2024).
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 Alcoholic Beverage Taxes
Florida imposes excise taxes on malt beverages, wines, and other beverages. 22 The taxes are due from
manufacturers, distributors and vendors of malt beverages, and from manufacturers and distributors of
wine, liquor, and other specified alcoholic beverages. Taxes are remitted to the Division of Alcoholic
Beverages and Tobacco (Division) in the Department of Business and Professional Regulation (DBPR).
The Division is responsible for supervising the conduct, management, and operation of the
manufacturing, packaging, distribution, and sale of all alcoholic beverages in Florida. 23 Distributions of
the excise taxes on alcoholic beverages are made to the General Revenue Fund, the Alcoholic
Beverage and Tobacco Trust Fund, and Viticulture Trust Fund. Collections of alcoholic beverage taxes
were $317.4 million in Fiscal Year 2022-2023 with distributions to General Revenue of $311.9 million.24
Sales Taxes Paid by Direct Pay Permit Holders
Section 212.183, F.S., authorizes the DOR to establish a process for the self-accrual of sales taxes due
under ch. 212, F.S. The process involves the DOR granting a direct pay permit to a taxpayer, who then
pays the taxes directly to the DOR.25
Effect of Proposed Changes
The bill creates s. 402.261, F.S., Child Care Tax Credits. This program provides tax credits to
businesses that incur costs related to specified child care services provided for their employees. The
credits are generally a dollar-for-dollar credit against certain tax liabilities, up to a maximum amount per
cost type and per taxpayer.
The tax credit can be taken against the business’s liability for several state taxes, including:
 Corporate income tax;
 Insurance premium tax;
 Severance taxes on oil and gas production;
 Alcoholic beverage tax on beer, wine, and spirits; or
 Self-accrued sales tax liability of direct pay permit holders.
The bill provides for a credit for one or more of the following, capped as noted below:
 A credit of 50 percent of the startup costs of a child care facility for children or grandchildren that
is operated by the corporate for the benefit of its employees.
o This credit is capped in an inverse proportion to the other two credits below, to allow smaller
companies a larger share of credit for investment in a childcare facility:
Maximum Credit per
Number of Employees
Taxable Year
1-19 $1,000,000
20-250 $500,000
More than 250 $250,000
 An additional credit is allowed for the operation of the facility in the amount of $300 per month
for each child or grandchild of an employee enrolled in the facility. Such a facility must be
22 Sections 563.05, 564.06, and 565.12, F.S.
23 Section 561.02, F.S.
24 Florida Revenue Estimating Conference, 2023 Florida Tax Handb ook (Oct. 2023), p. 44, availab le at
http://edr.state.fl.us/content/revenues/reports/tax-handbook/taxhandbook2023.pdf (last visited Jan. 18, 2024).
25 Section 212.183, F.S., and rule 12A-1.0911, F.A.C. Direct pay permit holders include: dealers who annually make purchases in
excess of $10 million per year in any county; dealers who annually purchase at least $100,000 of tangible personal property, including
maintenance and repairs for their own use; dealers who purchase promotional materials whose ultimate use is unknown at purchase;
eligible air carriers, vessels, railroads, and motor vehicles engaged in interstate and foreign commerce; and dealers who lea se realty
from a number of independent property owners.
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 available to all employees or must be allocated on a first-come, first-served basis and must be
used by employees of the corporation. Such a facility may be jointly established and operated
by two or more corporations.
o This credit is capped as follows:
Maximum Credit per
Number of Employees
Taxable Year
1-19 $50,000
20-250 $500,000
More than 250 $1,000,000
 A credit for 100 percent of the child care payments made to an outside child care facility in the
name of and for the benefit of an employee of the corporation whose child or grandchild attends
the facility. The credit is limited to a maximum of $3,600 per child, per year, and the amount for
which a credit is claimed may not exceed the amount charged by the facility for other children of
like age and ability who are not the children of employees of the corporation.
o This credit is capped as follows:
Maximum Credit per
Number of Employees
Taxable Year
1-19 $50,000
20-250 $500,000
More than 250 $1,000,000
A business can qualify in all three categories depending on the services provided by the business
during the applicable year, and the total available to the business is the total of the applicable caps
listed above.
To qualify for any of the categories, the child care facility operated by the business or paid by the
business must be an eligible child care facility, meaning that it must either be licensed under s.
402.305, F.S., or be exempt from licensure under s. 402.316, F.S.
The total statewide credit amount that can be approved for all applications is $5 million per year.
The program retains the five-year carryforward from the original 1998 credit, as well as the pro rata
repayment provision for any child care facility that does not operate for a full five years after receiving a
credit.
The bill also adopts the following administrative and conforming provisions:
The bill allows taxpayers to make application for the tax credits beginning October 1, 2024, and outlines
the requirements of the application process to be developed by the Department of Revenue (DOR),
priority of applications, timelines for review of applications with notices of approval or denial, and
provides the DOR with rulemaking authority.
The bill creates s. 211.0254, F.S., to allow a child care tax credit beginning January 1, 2025, against
any tax due for oil and gas production under ss. 211.02 and 211.025, F.S. The bill provides a limitation
on the total credit that may be taken on a return i