Bill > HB403

This bill establishes two new refundable income tax credits for taxable years 2026 through 2030 in Virginia, aimed at supporting child care expenses. First, it creates a credit for qualified taxpayers, defined as individuals or married couples whose family income is no more than 400% of the federal poverty guidelines, allowing them to claim a credit equal to 20% of the federal child and dependent care credit they received. Second, it offers employers a credit for 50% of their "qualified child care expenditures," which include costs for acquiring, constructing, rehabilitating, or expanding property for a licensed child day center that participates in Virginia's VQ5 system, as well as operating costs and contracting for child care services, with a limit of $500,000 per employer annually, adjusted for inflation. Both credits are refundable, meaning if the credit amount exceeds the taxpayer's tax liability, the excess will be refunded within 90 days, and the total amount of each credit type claimed statewide is capped at $10 million per year. The Tax Commissioner will create guidelines for claiming these credits, which will be exempt from standard administrative procedures.