Sponsor proposes B&O tax credit to encourage employer-supported childcare; large fiscal note accompanies bill

House Bill 1564, introduced by Representative Josh Penner, would create a business-and-occupation (B&O) tax credit and public utility tax credit equal to employer expenditures for providing childcare assistance to employees, including payments toward childcare costs or costs of employer-provided on-site childcare.

Christina King, staff to the committee, described the measure: beginning Jan. 1, 2026 the credit would be available and could be earned until Jan. 1, 2037; the bill includes a tax preference performance statement, JLARC review and a sunset date. King summarized the fiscal note: Department of Revenue estimated a general fund revenue decrease of roughly $33 million in FY26 (four months) and $104.3 million in FY27, totaling $137.5 million for the 2025-27 biennium; the 2027-29 biennium estimate was $223.7 million. DOR also estimated multi-million-dollar implementation costs including programming and taxpayer assistance.

Representative Penner, the bill’s sponsor, framed the proposal as a workforce and economic measure, saying employers that invest in childcare can increase retention and productivity and that the credit places resources directly with businesses that support employees. He acknowledged the fiscal note and the bill’s administration assumptions but urged committee members to consider enabling employers to expand childcare capacity.

Testimony in support came from the Washington Retail Association (Amber Carter), which said the credit would encourage employers to invest in childcare assistance and reduce reliance on public supports, and from the South Sound Military and Communities Partnership (Maria Tobin), which noted childcare is a barrier to military spouse employment and military readiness. No opposition testimony was reported in the transcript.

The committee closed the public hearing on HB 1564; no committee vote or amendment was recorded in the transcript.