Beginning with the new year, an enhanced tax credit is now available for businesses that support expanded access to high-quality child care for their employees.
Act 454 of the 2025 Regular Legislative Session modernizes and restructures an existing credit and renames it the Workforce Child Care Tax Credit, signaling a stronger alignment with Louisiana’s workforce development goals. Better Louisiana helped champion this legislation and wants businesses around the state to be aware that the new law doubles the value of the old credit and amounts to a huge change to this under-utilized tax incentive.
Access to reliable, affordable child care is essential for Louisiana’s working families and the businesses that depend on them. This new change will allow more parents to stay in the workforce while giving employers new tools to attract and retain top talent.
The new Workforce Child Care Tax Credit is available to businesses who make eligible investments in quality child care in 2026. They can claim the credit on their tax returns beginning in 2027. For the current tax year, the total tax credit available to be claimed is $1 million, which is allowed to grow to a maximum of $5 million in future years based on utilization. Because of this cap, applications for each tax credit will be approved on a first-come, first-served basis and it is important that businesses apply for the credits as early as possible in 2027.
Act 454: What It Does
- Establishes new Workforce Child Care Tax Credits for businesses and families across Louisiana.
- Expands existing business child care tax credits by doubling the maximum allowable expenses businesses can claim for supporting child care, including construction, renovation, and operations of child care facilities. The cap increases from $50,000 to $100,000 per tax year.
- Provides direct child care support for employees by doubling the cap on payments businesses can make to eligible child care facilities on behalf of employees, raising the limit from $5,000 to $10,000 per child per year.
- Reserves child care slots by allowing companies to claim up to $100,000 per year (up from $50,000) for purchasing or reserving child care slots for their employees’ children at eligible facilities.
- Increases support for high-quality providers by raising the tax credit amount that businesses can claim when their employees’ children are enrolled in top-rated programs.
Policy Goals & Outcomes
The goal of these enhancements is to encourage more employers to invest in child care solutions for their workforce, addressing one of the most significant barriers to employment for Louisiana families. By strengthening the link between business investment and childcare availability, the new law prioritizes economic growth and family stability.
Reliable child care is essential for the career advancement of working parents. Without dependable child care, parents frequently have to exit the workforce, take positions with limited prospects for promotion, or endure financial difficulties. Employers also face strains due to workforce turnover and increased employee recruitment and retention costs.
Workforce disruptions from inadequate or inconsistent child care cost Louisiana employers an estimated $762 million annually, according to a study from the Louisiana Policy Institute for Children. Conversely, when working parents miss work, they lose income, leading to decreased consumer spending in local communities, fewer job opportunities, and an overall annual estimated $1.3 billion economic loss for the Louisiana economy.
Better Louisiana has long championed policies that improve educational outcomes and workforce participation. This new law reflects a commitment to making Louisiana a more competitive and family-friendly state. Research shows that when parents have reliable child care, workforce participation rises, productivity improves, and children benefit from early learning opportunities.
Act 454 means more parents can work or advance their careers, businesses can better meet their staffing needs, and more children will have access to the high-quality early childhood education they need to succeed.
More detailed information is available from the Louisiana Department of Revenue through Workforce Child Care Tax Credits Bulletin #25-029.
