This bill addresses various aspects of child care in Iowa, including the child and dependent care tax credit, the establishment of a child care workforce matching grant program, and the introduction of a small business child care tax credit. The child and dependent care tax credit will now be equal to the federal credit without regard to the taxpayer's federal tax liability, and this change is retroactively applicable to tax years beginning on January 1, 2025. The child care workforce matching grant program aims to improve wages, benefits, and work environments for child care employees, while also collecting data on their needs.

Additionally, the small business child care tax credit is designed to support small businesses that provide child care benefits to their employees, with a credit amounting to the costs of these benefits up to $3,000 per employee per year, capped at $2 million per fiscal year. The bill also modifies eligibility requirements for state child care assistance, lowering the minimum work hours for parents and adjusting income thresholds for eligibility. It mandates that the Department of Health and Human Services (HHS) reimburse child care providers at rates equal to what they charge private-pay families and allows for copayments based on household income for families participating in the assistance program.

Statutes affected:
Introduced: 422.12C, 422.12, 422.60, 533.329, 237A.13