HELP FOR FAMILIES WITH YOUNG CHILDREN
Raising young kids can be hard on a family’s finances, especially given the high cost of child care. Nebraska’s refundable Child Care Tax Credit for Working Parents can ease the strain on families and make providing for their little ones just a little bit easier.
Who is this tax credit for?
The refundable Child Care Tax Credit is for parents or legal guardians of one or more children age 5 or younger. Your family must meet certain household income guidelines to be eligible for the credit.
What’s a refundable tax credit?
Refundable tax credits are subtracted from the amount you owe in state income tax. If the amount of your credit is larger than your tax liability, the difference is refunded to you.
How do I know if I’m eligible for the refundable Child Care Tax Credit?
You may be eligible for the refundable Child Care Tax Credit if your child or children are age 5 or younger and your annual household income does not exceed $150,000. At least one of the following must apply:
- Your child is enrolled in a licensed child care program, OR
- Your child receives care from a license-exempt child care provider who participates in the child care subsidy, OR
- Your total annual household income is less than or equal to 100% of the Federal Poverty Level (FPL). For more information, click here.
How much is the refundable tax credit?
If you qualify, the amount of the credit is determined by your annual household income and the number of children age 5 or younger.
| Total Annual Household Income | Tax Credit (per child age 5 or under) |
| $75,000 or less per year | $2,000 per child |
| Between $75,000 and $150,000 | $1,000 per child |
What are some examples of how the refundable tax credit works?
Example 1: A single-child family with an annual household income of $110,000 has a 1-year-old enrolled in a licensed child care program. The family could qualify for a $1,000 refundable tax credit.
Example 2: A two-child family with an annual household income of $72,000 has a 1-year-old and a 3-year-old enrolled in a licensed child care program. The family could qualify for a $4,000 refundable tax credit ($2,000 per child).
Example 3: A single-child family of three has an annual household income of $24,000 and a 1-year-old who is cared for at home. This family could qualify for a $2,000 refundable tax credit even though their child is not enrolled in a licensed program because their household income is below the Federal Poverty Level for a 3-person household ($25,820).
NEW INFORMATION ABOUT THE APPLICATION PROCESS
Applications for the refundable Child Care Tax Credit should be submitted as early as possible after the application period opens on January 2, 2025. You must receive your tax credit approval from Nebraska Department of Revenue before filing your state income tax return to claim the refundable credit.
PLEASE NOTE: Applications for the tax credit will be submitted electronically through the Nebraska Department of Revenue’s eDASH system on the department’s Child Care Tax Credit Act webpage. This system will be activated on January 2, 2025. See “How to Apply” for more information.
How to Apply
- PREPARE FOR YOUR APPLICATION: Visit the Nebraska Department of Revenue (NDOR) website for a complete list of the information you’ll need to have ready before you begin filling out your application for the NE Child Care Tax Credit.
- COMPLETE AND SUBMIT THE APPLICATION: The application window for the refundable Child Care Tax Credit opens on January 2. You will be able to complete and submit your application electronically using the eDASH system on NDOR’s Child Care Tax Credit Act webpage.
- CLAIM THE TAX CREDIT: If your application is approved, you will receive a certificate to attach to your 2024 state income tax return. The amount of the credit will be subtracted from any tax you owe. Any unused credit will be refunded to you.
Note: These application instructions are current as of 11.25.24. They will be updated as new information is published by NDOR.
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