Indiana has offered an Employer Child Care Expenditure Credit for years, but its narrow rules meant few businesses ever claimed it. That changed when HB 1177 was signed on March 3, 2026. For taxable years beginning after December 31, 2025, more employers qualify, raising the cap from 100 to 500 employees. A wider range of child care support now counts, from reserving slots with a local provider to funding referral services. The five-year recapture provision is also gone.
The credit equals 50% of qualified child care expenditures, up to $100,000 per employer per year. It may stack with the expanded federal 45F credit. Because the statewide cap is $2.5 million and credits are awarded in the order returns are received, planning ahead matters.
In the video below, HSC Vice Presidents Aaron Wilzbacher, CPA, and Patrick Schroeder, CPA, explain what changed, what counts as a qualified expense, and how to decide which approach fits your business.
Have questions about how the credit applies to your business? Contact Aaron Wilzbacher at 812.491.1322 or awilzbacher@hsccpa.com, or Patrick Schroeder at 812.491.1427 or pschroeder@hsccpa.com.
This content is for general informational purposes only and is not tax, legal, or accounting advice.
