Active 2026 State Tax Credit
Pennsylvania Child Care Tax Credit & Keystone Stack
Pennsylvania's Act 56 (2024) provides a 30% employer tax credit on qualified child care expenditures, effective 2025. Combined with the Federal 45F Credit and 6 regional ELRCs, Pennsylvania is a strong state for employer-sponsored child care.
2026
Program Year
Active
Program Status
45F
Federal Credit Available
All
Employers Eligible
βοΈ How the Cost Split Works
Employer Pays
~33%
of total tuition
Pennsylvania Pays
~33%
state match
Parent Pays
~33%
of total tuition
π The Pennsylvania Savings Stack
Stack available Pennsylvania programs with the Federal 45F Tax Credit for maximum employer savings.
| Benefit Layer | Small Business (<$32M) | Large Business |
|---|---|---|
| State Program Benefit | Varies by program | Varies by program |
| Federal 45F Credit (2026) | 50% Tax Credit | 40% Tax Credit |
| Net Employer Cost | Significantly Reduced | Significantly Reduced |
π° Real-World Employer Savings
| Cost Component | Without Program | With State + 45F Stack |
|---|---|---|
| Annual child care cost (per employee) | $12,000 | $12,000 |
| State Program Benefit | $0 | Varies |
| Employee Share | $0 | Reduced |
| Employer Share | $12,000 | Reduced |
| Federal 45F Credit (50% of employer share) | $0 | Significant savings |
| Net Employer Cost | $12,000 | Significantly Lower |
π Employer Child Care Tax Credits & Programs
π‘ Federal Tax Credit Available: All U.S. employers qualify for the Federal Section 45F Employer Child Care Tax Credit β up to $600,000/year for small businesses under the 2026 OBBBA expansion. Stack this with your state program for maximum savings.
Pennsylvania HB 1745 Employer Tax Credit
State Tax Credit
30% of employer contributions
Eligibility: All Pennsylvania employers with qualifying child care expenses
Pennsylvania Child Care Works (CCW)
State Subsidy
Sliding-scale co-pay based on income
Eligibility: Families at or below 200% FPL
Federal Section 45F Credit
Federal Tax Credit
Up to 50% of employer costs (max $600K/yr)
Eligibility: All U.S. employers with qualifying child care expenses
Keystone STARS Quality Rating
State Program
Quality ratings for child care providers
Eligibility: Licensed Pennsylvania child care providers
Duo-Share (Employer + Employee)
Employer Benefit
Flexible split β employer covers 25β75%
Eligibility: Any Pennsylvania employer, no state program required
π Geographic Coverage
Major Cities Served
County Coverage
All 67 Pennsylvania counties are served through 6 regional ELRCs. Contact your regional ELRC for Act 56 employer tax credit enrollment.
β Frequently Asked Questions
HB 1745 created a 30% employer tax credit on contributions toward employee child care costs. This credit can be stacked with the Federal Section 45F Credit for up to 80% combined savings.
Yes β Pennsylvania employers can stack the HB 1745 state credit (30%) with the Federal Section 45F Credit (up to 50%). Together, these credits can offset up to 80% of employer child care contributions.
Philadelphia, Pittsburgh, Allentown, and Erie have the highest employer participation rates. The HB 1745 credit is available statewide to all Pennsylvania employers.
Pennsylvania does not have a formal Tri-Share program. However, HB 1745 creates a strong employer incentive. We recommend a Duo-Share model β contact us for a free consultation.
Pennsylvania's Child Care Works (CCW) program serves families at or below 200% of the Federal Poverty Level (FPL). Contact Pennsylvania DHS for current income thresholds.
Keystone STARS is Pennsylvania's quality rating and improvement system for child care providers. Higher-rated providers receive additional funding and are preferred partners for employer child care programs.
Contact the Pennsylvania Department of Revenue at revenue.pa.gov for guidance on claiming HB 1745 credits.
π References & Sources
Last Updated: May 9, 2026