The best benefit for keeping midcareer talent is now also the cheapest to fund: new tax credits can return most of what an employer spends on child care. Virtually no one knows it.
In January 2026, a federal tax credit for employer-provided child care got a major expansion. Companies that help pay for employees' licensed child care now get 40% of that money back from the federal government, and 50% if they're a smaller business. See the IRS's own explanation here, as well as a plain-English guide from The Bipartisan Policy Center, a nonpartisan think tank, here.
Many states, including New York, add their own state credit on top; New York's is on the state's own site here. Combined, a New York-based employer often gets 70% or more back.
An example with real numbers: Say a New-York-based company puts $50,000 a year toward its employees' daycare and preschool bills. After the credits, the real cost to the company can be $15,000 or less. Employees get the full $50,000 of help. Per dollar of net cost, almost nothing else in a benefits package delivers this much value to employees.
What This Isn't
A dependent care FSA. The 'standard' child care benefit many companies offer is a DCFSA, which lets employees spend some of their own money on care tax-free. A DCFSA is nice to have, but they barely move the needle on the total cost of care in many areas. New options can be far more generous.
Free nanny care. Daycare centers, preschools, and licensed home-based programs generally qualify for the credit. Nannies and informal babysitting generally don't. Neither does K-12 education.
A perk for just the C-suite. The credits require care to be broadly available. Senior leaders absolutely can benefit, but it has to be on similar terms to rank and file employees.
Legal or tax advice. While we have reviewed our general program design with outside tax counsel (with a summary of that review available on request), we are not lawyers or CPAs. We work alongside your tax advisors, and they, not us, own credit calculations and sign-offs.
