Parent Choices Logo
State of Maine Child Care Tax Credits
There are several categories of tax credits that are child care related:
  • Employer-Assisted Child-Care Tax Credit
  • Quality Child Care Investment Credit
  • Double Child Care Tax Credit
Employer-Assisted Child Care Tax Credit:

This credit is available to employers who provide or pay for child care services for their employees. Employers are eligible for an income tax credit of up to $5,000; the credit is limited to the lesser of $5,000, 20% of the cost incurred, or $100 for each child of an employee enrolled on a full-time basis or for each full-time equivalent throughout the tax year. The allowable credit doubles if the child care services provided quality as "quality child care." The tax credit is limited to the income tax otherwise due, but any excess can be carried back 3 years or carried forward 15 years.

Quality Child Care Investment Credit

A taxpayer that has made an investment during the tax year toward the goal of providing quality child care services is allowed a credit in an amount equal to the qualifying portion of expenditures paid or expenses incurred by the taxpayer for certified investments in child care services. For corporations, the qualifying portion is 30% of up to $30,000 of expenditures; for individual taxpayers that expend at least $10,000 during the tax year, the credit is $1,000 each year for nine years and $11,000 in year ten. The credit is limited to the income tax otherwise due, but any excess can be carried over to the following year or years until exhausted.
Double Child Care Tax Credit

As a Maine taxpayer, a parent can be eligible for a double state tax credit for child care expenses. The double tax credit is available for children who are enrolled in child care programs with "Quality Certificates." Child care programs receive a Quality Certificate when they earn a Step 4 rating on the Quality for ME, Maine’s child care rating system. To reach Step 4, programs must:
  • Be accredited by NAEYC, NAFCC, AMS, COA, or receive Blue or Gold designation from Head Start.
  • Incorporate Maine’s Early Childhood Learning Guidelines and /or Maine’s Infant Toddler Guidelines for Learning and Development into curriculum planning, observations and assessments.
  • Create professional development plans for staff beyond those required by licensing rules.
  • Meet other criteria based on the type of child care.


An individual is allowed a credit against the tax otherwise due in the amount of 25% of the federal tax credit allowable for child and dependent care. This credit doubles in amount if the child care expenses were incurred through the use of programs with Quality Certificates. The credit may result in a refund of up to $500.

None of the tax credits related to child care are restricted to providers that get public funds.

What is restricted to those providers in receipt of public child care subsidy, is the Quality "bump" which is added to a child care slot or voucher payment when the family child care provider or center is at a Step 2 (2%), 3 (5%) or 4 (10%) on the Quality for ME rating scale. This distinction is made based on the "bump" being funded by the federal Child Care Development Fund.

Also, more information on childCare tax credits can be accessed at:

http://www.maine.gov/dhhs/ocfs/ec/occhs/businesssupport.htm
Copyright (c) 2011-2012 The University of Maine. All rights reserved.