Committee reviews property-tax exemptions and income‑tax credits tied to child care costs

The Senate Committee on Finance and Revenue held an informational session on tax incentives related to child care, reviewing property-tax exemptions, income-tax credits and direct expenditure programs and how those policies interact with out‑of‑pocket child care costs.

Beau Olin and Kyle Easton (Legislative Revenue Office) presented data showing substantial variation in child care prices by geography and provider type. For example, the presenters highlighted that infant care in high‑population counties can cost about $15,000 per year, while similar care in low‑population counties may cost roughly $7,500 per year. Center-based care and care for younger children tend to be more expensive than home-based or school‑age care.

Presenters described two property-tax exemptions that affect child‑care providers: (1) the exemption for academies, daycare and student housing, which is a full real‑property exemption limited to facilities owned by charitable or religious organizations and compliant with the Office of Child Care; and (2) an exemption for agricultural housing and daycare facilities serving agricultural workers and families. The first exemption covers roughly 840 accounts across 19 counties and was estimated in testimony to have a revenue impact of about $80 million per biennium; the agricultural housing exemption covers about 22 accounts in six counties with annual fiscal impact reported as under $1 million.

On income taxes, the committee heard the differences between the federal child‑and‑dependent‑care tax credit and Oregon's working-family household and dependent care credit. Speakers noted that the federal credit phases the credit percentage from 35% down to 20% as income rises and caps qualifying expenses at $3,000 for one child and $6,000 for two children; the federal credit is nonrefundable, so low‑income taxpayers with little or no federal tax liability may receive no federal benefit. Oregon's credit is structured to benefit lower‑income taxpayers more heavily and phases out at about 300% of the federal poverty level; recent expansion of direct subsidy programs (for example, state employment‑related daycare and preschool programs) has reduced the claimed use of Oregon's credit because subsidized families have lower out‑of‑pocket child‑care expenses.

Committee members asked clarifying questions about program eligibility, how local direct‑service programs (for example, county preschool pilots) interact with tax credits, and how assumptions are chosen when evaluating jobs or fiscal effects. Presenters said the Oregon credit's usage has declined as direct subsidies increased; they offered to return with deeper analysis if the committee requests it.

No formal committee action was taken; the briefing was informational and the chair indicated the committee may revisit these topics later in session.