As a result of this legislative session, New Hampshire will have a Child Day Care Creation Tax Credit Program for businesses starting in 2027. The state joins 25 others with incentives for businesses to invest in expanding the child care supply.
Eligible businesses may claim a tax credit against the New Hampshire Business Profits Tax or Business Enterprise Tax. The credit will be equal to 50% of qualifying expenditures made to create a new licensed child care program, or expand an existing licensed program by at least 12 additional child care slots.
Qualifying expenditures may include costs associated with acquiring, constructing, renovating or expanding facilities, as well as certain operational expenses during the first two years of a new or expanded program. The law allows businesses to undertake these projects directly or through a third-party provider, allowing for flexibility.
The historical data available on the utilization of the federal Employer-Provided Child Care Credit suggests some businesses may be missing an opportunity. The federal provision is designed to allow employers to claim a credit for similar qualifying expenditures as New Hampshire’s new law, but the federal credit is generally more restrictive, as it is intended primarily to support employer-provided, or on-site, child care for employees. Utilization of the federal credit has been low; in 2018, less than 1% of corporate tax returns and 3% of business tax returns claimed the tax credit.
Uptake of another family-oriented business tax credit program in New Hampshire for participating in the Granite State Paid Family Leave Plan has also been limited. Only 31 businesses participated in State Fiscal Year 2025.
Some businesses may be too small to utilize the New Hampshire credit. U.S. Census Bureau data shows that, in 2022, about 83% of Granite State businesses had less than 20 employees, suggesting limited capacity to make the investments required to access the credit.
However, increased investment from even a relatively small number of businesses could help offset child care cost and availability challenges in New Hampshire. The number of licensed child care providers decreased by 16% from 2017 to 2025, while the average enrollment price for center-based and home-based care increased by 32% and 30%, respectively. The shortage of child care slots cost New Hampshire businesses between $36 million and $56 million in 2023.
This tax credit may be another avenue to provide the long-term systematic investment in the child care workforce needed to help ensure accessible and sustainable early childhood education in New Hampshire.
Dow Drukker is a senior policy analyst with the New Hampshire Fiscal Policy Institute. The NHFPI Policy Memo is a partnership of the NH Fiscal Policy Institute and NH Business Review.
As a result of this legislative session, New Hampshire will have a Child Day Care Creation Tax Credit Program for businesses starting in 2027. The state joins 25 others with incentives for businesses to invest in expanding the child care supply.
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