State Innovation – Tax Credits

The Child Care Contribution Tax Credit in Oregon was enacted in 2003. Donations are not made to individual child care programs, but rather to the Office of Child Care, which uses the funding for child care initiatives. The tax credit is worth 75 percent of the contribution and is not refundable, but may be carried forward to be used within the four years. e total amount of credits is capped at $500,000 per year, which yields $667,000 in revenue to be used for child care.

Funds are distributed to child care programs throughout the state on a competitive basis and have been used to increase provider wages, expand access to professional development, reduce parent costs to less than 10 percent of family income and improve the quality of care.

Eligible Grant Recipients

To be eligible for grants through this fund, providers are required to be regulated by the Office of Child Care, accept children whose care is paid for by a subsidy, provide high quality care as de ned by the Early Learning Council in collaboration with the Oregon Advisory Council and permit monitoring visits. In addition, home-based providers must enter into an agreement to continue to provide child care services for at least two additional years and provide care to children from at least two families that have incomes of 85 percent or less of the state median for the region. For centers, at least 25 percent of the families served by the center must have income at 85 percentĀ or less of the median for that region. Priority is given to applicants who charge low- income families less than 10 percent of gross family income.

Of Note

The Oregon Child Care Contribution Tax Credit passed as a pilot in 2001. The original concept, modeled a er the federal low-income housing tax credit, was advocated by the Enterprise Foundation. At $500,000, the cap on allowable credits is low. Future legislative efforts may be pursued to increase the cap.