Panel considers employer child-care tax credit; business groups ask to raise refundable share
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Summary
The Finance and Taxation Committee heard testimony on Senate Bill 2282, which would create an income-tax credit for employers that contribute to child-care costs for employees or pay child-care providers directly.
The Finance and Taxation Committee opened a hearing on Senate Bill 2282, a proposal to grant a state income-tax credit for contributions employers make toward child care for employees. Senator Kathy Hogan (District 21) introduced the bill and framed it as a workforce measure designed to increase labor participation by helping employees secure affordable child care.
Senator Kathy Hogan, sponsor, said child care is "a major driver for economic development throughout our nation" and that the state’s 2024 childcare package made progress but left gaps, especially for employers that cross state lines or need flexible options. She described this bill as an additional tool, not a universal solution, that could help roughly 25% of North Dakota employers, according to sponsor testimony.
Bill details and amendment requests: Testimony in committee described the bill as structured to provide a 30% tax credit on employer contributions up to $500 per employee (current bill language). The Greater North Dakota Chamber and other business groups asked the committee to amend the credit from 30% to 50% to match earlier working-parent programs and make employer participation more attractive. Andrea Fenigan (Greater North Dakota Chamber) recommended increasing the percentage to 50% in committee.
Provider testimony and the market context: Bill Baumann of the Missouri Valley Family YMCA described operating child care centers and the financial challenge of serving infants (0'3). "The marketplace says if you want to hire people, you gotta pay them 13 to $18 an hour," Baumann said, and he explained that 0'3 care typically loses money for providers under current rates and staffing ratios. Baumann described a local partnership in which employers pay to reserve slots — effectively underwriting building or capacity costs — and said the credit could help encourage similar employer investments.
Administrative questions and limits: Matt Perot of the Office of the State Tax Commissioner said the department could administer a credit but raised practical questions the committee should consider: whether payments to out-of-state facilities would qualify and how contributions tied to employees working in multiple states should be handled. He also noted federal tax rules and limits: employer-provided childcare benefits that are tax-free to employees are capped at $5,000 per year under existing federal rules, and the committee discussed how existing program rules and the new credit would interact.
Other testimony: Support came from the Greater North Dakota Chamber, YMCA representatives, and other workforce stakeholders. Panel members asked for data on utilization and the return on investment for earlier childcare appropriations; witnesses said some programs enacted last session have had low enrollment because of administrative complexity, while other components (state-funded workforce supports) have produced measurable hiring gains for providers.
Ending: Committee members asked staff and sponsors to examine technical language (for example, how the credit treats payments to out-of-state providers and employee-state residency issues) before advancing the bill. No final committee vote was taken at the hearing.
