Policy Resource

Louisiana's School Readiness Tax Credits

Feb 9, 2016

Financing resource information on state policies and initiatives that impact infants, toddlers and their families

In 2007, the Louisiana Legislature passed Act 394, which enacted Revised Statutes 47:6101-6109 to provide a package of tax credits known as the School Readiness Tax Credits. These credits allow tax breaks to families, child care providers, child care directors and staff, and businesses that support child care in an effort to encourage child care facilities to voluntarily participate in the quality rating program administered by the Louisiana Department of Children and Family Services (DCFS) under the name of Quality Start Child Care Rating System. Each of the four tax credits is refundable, which means the credit can be greater than an individuals tax liability and may be received as a payment even if an individual does not owe any taxes. In January 2015, all Quality Start child care center, directors and teachers were notified of the program.

The tax credit to parents is available to families with a child under the age of six who is enrolled in child care. It is based upon the quality rating of the child care center that the child attends. The tax credit to business is available to employers that support quality care in three ways: by constructing, renovating or expanding a facility; making payments to an eligible child care center; or by subsidizing child care for their employees. This credit is also tied the quality rating of the child care center, and cannot exceed $5,000 per year.

Additionally, the tax package helps child care providers offset the costs of improving their services, such as higher wages for trained staff. The tax credit to providers is designed to increase access to quality care for low income children. This credit is based on the quality rating of a providers center and on the number of children served by the center that are in Louisianas child care subsidy program. The credit ranges from $750 per eligible child at a two star center to $1,500 per eligible child at a five star center. Finally, the tax credit to child care professionals is available to child care directors and staff based on increased levels of education attainment to help address the issue of retaining quality staff. This credit ranges from $1,500 to $3,000, depending on the level of qualifications met. Staff must work in the qualifying center for at least six months to be eligible.

The tax credit legislation was enacted largely due to a strong joint advocacy effort led by BrightStart, the states Early Childhood Comprehensive System grant initiative, along with the Louisiana Partnership for Children and Families and the Tulane Institute of Infant and Early Childhood Mental Health. In all, a large and diverse group of more than 24 childrens organizations, foundations, government watchdog entities, and lobbyists worked together to move the bill towards passage.

For more information, see http://revenue.louisiana.gov/IndividualIncomeTax/SchoolReadinessTaxCredit or the 2014 ZERO TO THREE presentation http://www.zerotothree.org/policy/docs/state-meeting/melanie-bronfin-presentation.pdf

For data on the programs activity http://www.policyinstitutela.org/#!school-tax-credits/c24jg

Updated January 2016.

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