Child care

From the 2024 DOR Tax Exemption Study

82.04.2905 - Childcare Description Income from businesses providing childcare services for periods less than 24 hours receive the preferential B&O tax rate of 0.484%, rather than the service and other activities B&O tax rate of 1.5% or 1.75%. Notes: - Churches that provide childcare services for periods less than 24 hours and exempt from property tax are exempt from B&O tax. - Care services of children under eight years old and who are not enrolled in first grade or above are exempt from B&O tax. - The impacts from these exemptions are in separate estimates. Purpose Reduces the cost of childcare and reduces the tax burden for an industry with low profit margins. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $1.790 $1.850 $1.940 $2.030 Local Taxes $0.000 $0.000 $0.000 $0.000 Repeal of Repealing this preferential rate would increase revenue. exemption Potential ($ in millions): revenue gains FY 2024 FY 2025 FY 2026 FY 2027 from full repeal State Taxes $0.000 $1.700 $1.940 $2.030 Local Taxes $0.000 $0.000 $0.000 $0.000 Assumptions - This repeal takes effect July 1, 2024, and impacts 11 months of collections in fiscal year 2025. - Growth rate mirrors the