Active employer–provider grant opportunity
Tennessee Employer Child Care Grants & Assistance
Tennessee supports employer–provider projects that add licensed child care capacity through NEW Care Partnership Grants. The state also administers Smart Steps payment assistance for eligible families.
2024
NEW Care launched
$15M/yr
Three-year pilot allocation
1:1
Potential match of employer monetary support
85% SMI
Smart Steps income ceiling
🏗️ How Tennessee NEW Care Partnerships Work
NEW Care is a Tennessee Department of Human Services grant opportunity for licensed child care organizations that partner with private employers to create or expand licensed child care capacity for the employer's workforce. Projects are application-based and must add capacity rather than displace existing slots.
Employer
Commits support
Money, facilities, operations, or reserved-slot support
Tennessee
May match
Employer monetary support for an awarded grant term
Provider
Adds capacity
Creates or expands licensed spaces for the workforce
Important distinction
A NEW Care award can match an employer's monetary support for a capacity-building project. It does not automatically divide an employee's tuition 50/50, guarantee an award to every employer, or create a statewide Tri-Share entitlement.
đź“‹ Verified NEW Care Grant Facts
| Program feature | Verified detail |
|---|---|
| Launch and funding | Launched February 1, 2024 through a three-year Child Care Improvement Fund pilot allocating $15 million per year. |
| Applicant | An eligible Tennessee child care organization; all types of licensed child care providers became eligible to propose projects beginning July 1, 2025. |
| Employer role | A private employer must formally commit resources or support for new licensed capacity serving its workforce. |
| Potential state match | For an awarded project, state funds may match the employer's monetary support during the grant term. |
| Allowable models | Examples include construction or renovation, employer-provided space, operating support, or paying to keep newly created slots available. |
| Grant term and award | Contracts may cover one to two years. Applications are reviewed, funding is limited, and no applicant is guaranteed an award or the full amount requested. |
👨‍👩‍👧 Smart Steps & Child Care Payment Assistance
Smart Steps is a separate Tennessee family-assistance program. It is not an automatic third layer of every NEW Care project.
| Requirement | Current TDHS rule |
|---|---|
| Child age | Six weeks through kindergarten for Smart Steps. |
| Parent activity | An average of at least 30 hours per week of qualifying work and/or postsecondary undergraduate education. |
| Income | Countable household income below 85% of Tennessee State Median Income. Current dollar limits depend on household size. |
| Parent cost | A parent copay is required and is generally calculated from 5% of countable monthly gross household income; provider overages and certain fees may also apply. |
| Provider | The selected provider must participate, or agree to participate, in Tennessee's Child Care Certificate Program. |
Review current TDHS eligibility and application guidance →
🏛️ Federal Section 45F for Tennessee Employers
Section 45F is federal—not a Tennessee tax credit. For qualified expenditures paid or incurred after December 31, 2025, the credit generally equals 40% of qualified child care expenditures, or 50% for an eligible small business, plus 10% of qualified resource-and-referral expenditures. The annual limit is $500,000, or $600,000 for an eligible small business.
Tax treatment is not automatic
The employer must incur expenditures that meet the statute's definitions and conditions. Grant proceeds, employer contributions, provider contracts, business tax liability, and other benefits can affect the calculation. Employers should obtain qualified tax advice before assuming a NEW Care investment generates a Section 45F credit.
đź“š Verified Tennessee Child Care Programs
NEW Care Partnership Grants
Employer–provider capacity grant
Potential state match of employer monetary support for awarded projects
Applicant: eligible Tennessee child care organization with a private-employer commitment
Smart Steps Child Care Payment Assistance
Family payment assistance
Assistance with a required parent copay
For qualifying families below 85% SMI who meet child-age and work/education rules
Child Care Certificate Program
State payment-assistance framework
TDHS pays approved participating providers for eligible families
Eligibility depends on the applicable assistance category
Tennessee Quality Rating Improvement System
Provider quality system
Quarterly evaluation of health and safety and teacher–child interactions
Applies to licensed child care agencies under TDHS rules
Federal Section 45F Credit
Federal business tax credit
40% of qualified child care expenditures; 50% for an eligible small business
Subject to federal definitions, nondiscrimination rules, tax liability, and annual limits
Employer-Funded Child Care Benefit
Voluntary employer benefit
Employers may design benefits outside a state Tri-Share program
Structure, tax treatment, provider contracting, and employee eligibility require case-specific review
đź“Ť Tennessee Availability & Project Coverage
Eligible Tennessee child care organizations may apply with private-employer partners, including projects in major metros and rural communities. Awards are project-specific and dependent on review, available funding, and regulatory authority; the official guidance does not establish funded NEW Care coverage in every county.
âť“ Tennessee Employer Child Care: Frequently Asked Questions
No current Tennessee state employer child care tax credit was verified in Tennessee Department of Revenue incentives guidance or Tennessee Department of Human Services child care program materials. Tennessee employers may instead explore NEW Care employer-provider grant partnerships, voluntary employer cost sharing, and federal Section 45F if their expenditures qualify.
Tennessee does not currently operate a statewide 33/33/33 Tri-Share benefit for families. NEW Care Partnership Grants instead support approved child care provider-employer projects that add licensed capacity for an employer's workforce.
NEW Care is a Tennessee Department of Human Services grant opportunity launched in 2024. Licensed Tennessee child care organizations may propose projects with private employers to create or expand licensed child care capacity for the employer's workforce. If a project is awarded, state funds may match the employer's monetary support during the grant term.
The applicant is an eligible Tennessee child care organization working with a private employer. The proposal must include an employer commitment, explain how new licensed capacity will be created, and meet Tennessee's application and quality requirements. Applications are reviewed and awards are not guaranteed.
Smart Steps serves income-eligible Tennessee families with children from six weeks through kindergarten when a parent works or participates in qualifying postsecondary education for an average of at least 30 hours per week. Household income must be below 85% of State Median Income, and a parent copay is generally required.
For amounts paid or incurred after December 31, 2025, Section 45F generally equals 40% of qualified child care expenditures, or 50% for an eligible small business, plus 10% of qualified resource-and-referral expenditures. The annual limit is $500,000, or $600,000 for an eligible small business. Eligibility depends on statutory requirements and qualifying expenditures; it is not automatic.
The Tennessee grant opportunity is open to eligible Tennessee child care organizations partnering with private employers, but projects are application-based, competitively reviewed, and dependent on available funding. The official guidance does not establish automatic program coverage or funded projects in every county.
🔎 Primary Sources
- Tennessee DHS — NEW Care Partnership Grants
- Tennessee DHS — NEW Care Partnership Application Guide, updated 2025
- Tennessee DHS — February 1, 2024 launch announcement
- Tennessee DHS — Child Care Payment Assistance
- Tennessee DHS — FY 2026 income and parent-copay chart
- Tennessee DHS — Quality Rating Improvement System
- Tennessee Department of Revenue — Business incentives guidance
- U.S. Code — 26 USC §45F, Employer-provided child care credit
Fact-checked and updated August 27, 2026