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Committee hears bill to give employers a credit for childcare contributions as part of broader childcare reforms
Summary
Senate Bill 2282 would create a state tax credit for employers that contribute to employee child care costs, equal to 30% of qualifying contributions limited to the first $500 per employee, according to sponsor Senator Kathy Hogan.
Senator Kathy Hogan told the Senate Committee on Finance and Taxation that Senate Bill 2282 would create a state tax credit to encourage employer support for employee child care. The bill would allow employers a credit equal to 30% of qualifying contributions for child care, limited to the first $500 of contributions per employee.
"This is one piece of that big package," Senator Kathy Hogan said, describing the credit as an additional tool to encourage employer investment in child care alongside prior legislation (House Bill 1540) and other state programs.
Business groups and chambers supported the bill as a flexible option to help employers facing workforce shortages. Andrea Fenig, vice president of government affairs for the Greater North Dakota Chamber, told the committee that labor availability and child care access are top concerns for members and that the bill mirrors incentives used in other states. Fenig asked lawmakers to consider raising the credit percentage from 30% to 50% to increase its impact.
Child‑care providers and YMCA representatives described the acute cost and staffing pressures facing centers, especially infant care (ages 0–3). Bill Baumann, executive director and CEO of the Missouri Valley Family YMCA, said providers often operate on thin margins and face high staffing costs driven by licensing ratios and market wages, and that direct employer support or facility investments could make partnerships viable.
The tax office clarified mechanics. Matt Pearl of the Office of the State Tax Commissioner said the bill’s structure — 30% of contributions up to $500 per employee — effectively yields a $150 maximum credit per employee. Pearl and other tax staff also noted the proposal currently lacks carryforward or carryback provisions and suggested plain language changes to tie the credit to North Dakota‑licensed child‑care providers or to clarify treatment for employees who use out‑of‑state centers.
Committee members raised technical questions about whether contributions must be paid directly to a child‑care provider or may be made to an employee, how the credit would operate for pass‑through entities (flowing to owners on K‑1s), and how border employers with staff in neighboring states would be treated. The tax office confirmed pass‑through entities may claim the credit and explained that the current draft contains no carryforward or carryback.
Witnesses said the tax credit is unlikely to be a stand‑alone solution but could be one tool among several needed to stabilize the child‑care sector. The committee heard general support and neutral testimony and closed the hearing without a vote; members asked staff and sponsors to review mechanics and consider amendments including higher credit percentages or clarifying definitions.
