Updated November 5, 2026. Quick answer: The most the employer-provided child care credit under section 45F can be for taxable years beginning in 2027 is $515,943.67, or $619,132.40 for an eligible small business, per Rev. Proc. 2026-35, section 3.09. For 2026 the statute set the ceilings at $500,000 and $600,000. The credit itself is a percentage of what the employer spent, and these figures only cap it. It is a business credit, claimed by the employer on Form 8882.
The 2027 ceiling
The Revenue Procedure states: “For taxable years beginning in 2027, the maximum allowable credit under § 45F(b) is $515,943.67 ($619,132.40 in the case of an eligible small business).”
| Year | Maximum credit | Maximum credit, eligible small business | Source |
|---|---|---|---|
| 2026 | $500,000 | $600,000 | Section 70401(b) of Public Law 119-21, enhancement of the employer-provided child care credit |
| 2027 | $515,943.67 | $619,132.40 | Rev. Proc. 2026-35, section 3.09 |
The 2026 row is the amount written into the statute by the 2025 tax act, which says: “The credit allowable under subsection (a) for any taxable year shall not exceed $500,000 ($600,000 in the case of an eligible small business).” Those amounts apply to “amounts paid or incurred after December 31, 2025.”
Where the 2027 figures come from, and a check
The statute indexes both ceilings: “In the case of any taxable year beginning after 2026, the $500,000 and $600,000 amounts in paragraph (1) shall each be increased by an amount equal to” the dollar amount multiplied by a cost-of-living adjustment, using 2025 as the base year. 2027 is therefore the first year the ceilings move.
Check using only the two printed figures: $515,943.67 divided by $500,000 is 1.031887 (computed), and $619,132.40 divided by $600,000 is also 1.031887 (computed). Both ceilings carry the same adjustment factor, as the statute requires. The factor itself comes from the IRS’s cost-of-living series, which this page does not recompute.
What the credit is a percentage of
The statute sets the rates: “40 percent (50 percent in the case of an eligible small business)” of the qualified child care expenditures, plus “10 percent of the qualified child care resource and referral expenditures”. An eligible small business is defined by reference to the gross receipts test: “a business that meets the gross receipts test of section 448(c)”, worked over five years instead of three. The test amount for 2027 is on the cash method gross receipts test for 2027.
Where it goes on the return
The IRS form says: “Employers use Form 8882 to claim the credit for qualified childcare facility and resource and referral expenditures.” “The credit is part of the general business credit.” The form says that “Partnerships and S corporations, stop here and report this amount on Schedule K.” Everyone else reports it on “Form 3800, Part III, line 1k”, described on Form 3800, the general business credit.
A caution: the Form 8882 posted on irs.gov is the December 2017 revision. Its line 2 still multiplies line 1 by 25 percent, and its line 7 still caps the result at $150,000. Those are the amounts before the 2026 change, so work the credit from the statute and the figures above, not from the old line text.
Common mistakes
- Using the old $150,000 ceiling from the 2017 form for 2026 or 2027 expenditures. The statute raised it to $500,000 for amounts paid after December 31, 2025.
- Reading $515,943.67 as the credit an employer receives. It is the most the credit can be; the credit is a percentage of the expenditures.
- Applying the 2027 ceiling to 2026 spending. For taxable years beginning in 2026 the statute’s $500,000 and $600,000 apply.
- Treating a business as an eligible small business without running the gross receipts test over the five-year period.
Related: Form 3800, the general business credit, the cash method gross receipts test for 2027, and the small employer health care credit for 2027.
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Answer againSources
- Internal Revenue Service, Rev. Proc. 2026-35, tax year 2027 inflation-adjusted items: www.irs.gov
- Public Law 119-21 (One Big Beautiful Bill Act), July 4, 2025, enacted text (U.S. Government Publishing Office): www.govinfo.gov
- 26 U.S.C. 45F, Employer-provided child care credit (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
- Internal Revenue Service, Form 8882 (Rev. December 2017), Credit for Employer-Provided Childcare Facilities and Services: www.irs.gov
Read from the primary documents linked above on November 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.