Utah Just Made Child Care Benefits an 80% Tax Credit. Here’s What That Means for Your Business.

Utah employers now have one of the strongest financial incentives in the country to offer child care benefits. With the passage of HB190, Utah created a state-level Child Care Business Tax Credit that stacks directly on top of the newly expanded federal Employer-Provided Child Care Tax Credit (Section 45F). For small businesses, the combined result is up to 80 cents back on every dollar spent supporting employees’ child care costs. For larger employers, it’s up to 50 cents back.

This is one of the most powerful workforce benefit incentives Utah has ever offered, and most employers don’t know it exists yet.

Two Credits, One Powerful Stack

To understand why HB190 matters, you need to know what it’s layering on top of.

The federal foundation: Section 45F

The 2026 expansion of the federal Employer-Provided Child Care Tax Credit (Section 45F) was already a major shift. Previously capped at $150,000 with a modest 25% rate, the updated credit now offers:

The Utah layer: HB190

On top of those federal credits, HB190 provides an additional state-level tax credit:

• Small businesses: +30% state credit
• Large businesses: +10% state credit

Stacked together, the total picture looks like this:

Emily Bell McCormick, founder of The Policy Project, which championed HB190, put it plainly: “If I’m a small business in the state of Utah, I might say to my employees, ‘I’m going to give you $1,000 a month for their child care.’ As a small business, I’m getting $800 back when I file my taxes. It only costs [the company] $200, so it’s much more affordable.”

What Qualifies?

One of the most persistent myths about child care tax credits is that they require building and operating an on-site child care facility. They don’t. Qualifying expenses include:

• Direct subsidies paid to licensed child care providers on behalf of employees
• Reserved slots in licensed child care centers
• Backup care programs
• Contracts with third-party platforms connecting employees to care (like Upwards)
• Child care facility improvements

What doesn’t qualify: direct cash reimbursements to employees, contributions through a Dependent Care FSA (DCFSA), or informal and unlicensed care arrangements.

What the Math Looks Like for a Typical Small Utah Employer

Start with the simplest version of the math. You offer one employee $500 per month toward child care. Your actual out-of-pocket cost: $100. You got $400 back across your federal and state tax bills. For the employee, that $500 can cover up to 50% of their monthly child care costs, depending on their care arrangement.

Now scale that up. Say you run a 25-person company in Utah: a restaurant group, a medical clinic, a construction firm, a hotel, a retail business. Five of your employees have young children and you decide to offer each of them $500 per month in child care support.

Here’s what that looks like:

You’re providing $500 per month in meaningful child care relief to five members of your team. After both credits, your business is paying $100 per employee per month and your employees are keeping $500.

For a larger employer offering $500 per month to 50 employees with children:

One important note from the bill: HB190 includes a provision barring businesses from receiving the tax credit if they charge employees or deduct from their pay to help cover child care services. The benefit must be genuinely free to employees. That’s exactly the point.

This is a simplified illustration. Credit rates and caps may vary based on your specific circumstances, business size classification, and the type of qualified child care expenditure. Consult a qualified tax professional before making decisions about your benefits program.

Why Child Care Benefits Pay Off Beyond the Tax Credit

The financial case for the credits alone is strong. But child care benefits also address one of the most expensive, invisible costs in any business: employee turnover.

Research by Boston Consulting Group and Moms First estimates the return on employer child care investment at 90% to 425%, even before accounting for any tax credits. Upwards data shows that employees with access to care benefits have 5x less turnover and 30% fewer call-outs than those without.

Utah employers are feeling this acutely. Nearly 74% of Utah families with children under six say they need two incomes just to cover household expenses. And 75% of Utahns live in a child care desert, where there simply isn’t enough child care to serve the working population.

When care falls through, your employee doesn’t come in. When care is unaffordable for months, they leave. HB190 gives Utah employers an affordable way to change that.

Proof It’s Already Working in Utah

Park City and Summit County are the only communities in Utah currently running government-supported child care scholarship programs. Their Year 1 results, documented in Upwards’ published impact report, are a preview of what’s possible statewide.

Launched in January 2024 in Park City and expanded to Summit County in June 2024, the Needs-Based Child Care Scholarship Program is an innovative public-private partnership funded by local government and administered by Upwards. In its first year alone, with a total investment of $1.485 million from Park City and Summit County combined, the program delivered:

• 125 families and 150 children served across 28 regulated child care providers
• $4.64 million in measurable economic impact, driven by retained employment, avoided turnover costs, and increased worker productivity
• 213% return on investment: every $1 invested generated $3.13 in economic impact
• 80% of previously unemployed participants obtained employment within three months of joining the program
• 60% of participating families reported the program allowed them to stay employed
• $2.76 million in avoided employee turnover costs for local employers

Average monthly scholarship amounts were $471.85 for Park City residents and $787.39 for Summit County residents, with workforce scholarships set at a flat $200 per month, all going directly to licensed child care providers.

Who These Families Work For

The industries represented among scholarship recipients are a cross-section of Summit County’s entire economy. The hotel industry had the largest share of participants, followed by resort, healthcare, education, construction, financial services, legal services, housekeeping, interior design, and nonprofit sectors.

These are the workers who keep Utah’s ski resorts operating, its hospitals staffed, its schools running, and its restaurants open. Their employers span every major industry in the region. And right now, almost none of those employers offer child care support.

Think about what changes if they did.

Britt B., a hotel employee in Park City, described her situation plainly: “It’s made it affordable so I didn’t have to quit my job. Prior to getting the scholarship I was spending over half my monthly income on child care.”

Jordan L., a medical assistant in Summit County, shared that her scholarship “allowed me to also go back to school and get my advanced EMT to continue and effectively help Summit County on the ambulance and stay employed at my current job.”

Britt’s hotel employer. Jordan’s health center. The construction firm. The resort. Under HB190, every one of those businesses can now offer child care support to employees like Britt and Jordan, and get up to 80% of that cost back in combined federal and state tax credits.

A small hotel in Park City with 30 employees offering a $1,000 per month child care benefit would net the entire program for roughly $18,000 per year after credits. That’s less than the cost of replacing two employees — and the Year 1 data shows the ROI goes well beyond that.

Park City and Summit County Are Proof of Concept

The Year 1 impact reportdemonstrates something critical: targeted investment in child care works. It retains workers. It strengthens families. It generates economic returns that significantly exceed the original investment.

Park City and Summit County made this happen through public funding alone. HB190 now gives every Utah employer the tools to layer their own contribution on top, with the federal and state governments covering the lion’s share of the cost through tax credits.

These two communities are showing the rest of the state what’s possible. HB190 invites employers across Utah to join that effort and be meaningfully compensated for doing so.

Ready to Start Offering Child Care Benefits?

Upwards helps Utah employers design compliant, cost-effective child care benefit programs that maximize your Section 45F federal credit and Utah’s new HB190 state credit, and actually make a difference for your workforce.

Start offering child care benefits today →

No complicated setup. No on-site facility required. Just real support for the people who make your business run.

Related Reading

• The 2026 Employer Child Care Tax Credit Just Changed Everything — A deep dive into the federal Section 45F expansion
• Why Trucking Companies Are Losing Drivers Over Family Care — The retention crisis behind the numbers

Disclaimer: This post is for informational purposes only and does not constitute legal, tax, or financial advice. The calculations above are illustrative examples only. Credit eligibility, rates, caps, and definitions of qualifying expenses depend on your specific circumstances, business size, and the nature of your child care expenditures. Please consult a qualified tax professional or legal counsel before making any decisions related to your benefits program or tax filings. For official guidance, refer to IRS Form 8882 and the Utah State Tax Commission.