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Subsidies and Vouchers

Employers can help defray the cost of care
for their working families.

The average cost for infant child care in Pennsylvania is about $11,800 per year, and the average cost of care for a four-year-old is over $9,700. That means child care is, on average, as expensive or more expensive than the average rent or mortgage payment each month.

Vouchers or subsidies allow employers to help defray some of these costs and access high-quality care. Employers can give vouchers directly to employees or to preferred child care providers. Through subsidies, employers reserve a designated number of slots with local child care providers and can choose to offer financial support to employees who use those slots to help offset the costs.

Vouchers and subsidies can also support local child care providers by offering a stable revenue stream, thereby helping the business stay sustainable or even grow.

Vouchers, Subsidies, or Both?

Vouchers align with employee choice and offer a flexible disbursement structure (i.e. they can be given to providers or directly to working parents). Subsidies offset the cost of care in addition to reserving slots. Both improve access and can come with tax incentives for your business (U.S. Chamber Chamber of Commerce Foundation, ‘Roadmap for Employers’).

There is a financial benefit as well: Employers that supply child care subsidies can take advantage of an annual tax credit of up to $150,000 if they use it for qualified child care facilities and services. According to the IRS, “the credit is 25 percent of the qualified child-care facility expenditures, plus 10 percent of the qualified child-care resource and referral expenditures paid or incurred during the tax year.” To receive the tax credit, employers must complete Form 8882.

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