HB 389: Child Care Business Tax Credit - Utah

Amended 2/21/2025 10:02:224 → Substitute #1 · 5 edits

MODERATE

This bill introduces a nonrefundable tax credit for employers providing child care services, allowing them to claim 20% of qualified construction costs and 10% of qualified operating expenditures. The bill establishes specific geographic requirements for child care facilities based on county classifications and distances from employer offices. It also updates apportionment rules for nonresident taxpayers claiming these credits.

Scope change

The bill expands tax credit eligibility to include both corporate and individual income tax credits for employer-provided child care, with specific geographic limitations on where child care facilities must be located relative to employer offices.

ELIGIBILITY

New tax credit provisions enacted in Section 59-7-627 allowing qualifying employers to claim nonrefundable credits for child care construction and operating costs.

DEFINITION

New definitions for 'qualified child care facility' with specific distance requirements based on county classification (within one mile for first class counties, two miles for second/third class, or within municipality boundaries for fourth/fifth/sixth class counties).

TECHNICAL

Section 59-10-1002.2 amended to include Section 59-10-1048 in the list of tax credits subject to apportionment for nonresident and part-year resident individuals and estates or trusts.

Original version included Senate Sponsor Ann Millner; substitute version removes this sponsorship designation.

TIMELINE

Bill effective May 7, 2025, with retrospective operation for taxable years beginning on or after January 1, 2025.

Amended Excerpts 2/21/2025 10:02:224 → Amended 2/21/2025 10:02:224 · 3 edits

MINOR

The bill was reformatted from House Amendment excerpts to a complete substitute bill with a new title and structure, while retaining the core provisions for employer-provided child care tax credits. The substantive policy content regarding credit rates, eligibility criteria, and definitions remains largely unchanged from the original amendment text.

Scope change

The bill's scope remains focused on creating nonrefundable tax credits for employer-provided child care, with no changes to the fundamental applicability or target audience.

TECHNICAL

Document structure changed from House Amendment excerpts to a complete substitute bill format with title, sponsors, and formal legislative language.

Reorganized line numbering and formatting to match standard Utah legislative bill format rather than amendment markup style.

DEFINITION

Added detailed geographic proximity requirements for qualified child care facilities based on employer office location and county classification.

Introduced → Amended Excerpts 2/21/2025 10:02:224 · 4 edits

MODERATE

The bill was amended to clarify that employer-provided child care tax credits apply to both direct child care facility contracts and internal programs like training, scholarships, and increased compensation for child care training. The amendments also updated definitions to ensure the tax credit applies to qualified child care facilities located in Utah and clarified that the facility cannot be part of the employer's principal residence.

Scope change

The bill's scope was expanded to include internal employer child care programs (training, scholarships, compensation) alongside external facility contracts, and clarified that the facility must be located in Utah.

DEFINITION

Added 'operating costs' including training, scholarships, and increased compensation to the definition of qualified child care expenditures.

Clarified that qualified child care facilities must be located in Utah.

Updated principal residence exclusion to apply to the employer rather than just the person applying for the tax credit.

REQUIREMENT

Reorganized the structure of qualified child care expenditure categories to better distinguish between facility contracts and property expenditures.

Child Care Business Tax Credit

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