Parents or legal guardians of children five years old or younger and enrolled in daycare during 2024 may apply with the Nebraska Department of Revenue to receive a refundable tax credit if their total household income is $150,000 or less for the 2024 tax year. To qualify, the child must be age five years or younger as of December 31 of the calendar year (i.e., under age six) for which the tax credit is being requested and must be claimed by the parent or legal guardian as a dependent for federal income tax purposes.

The parent or legal guardian is eligible for the refundable tax credit:

• If the child is enrolled in a child care program licensed pursuant to the Child Care Licensing Act; or
• If the child receives care from an approved license-exempt provider enrolled in the child care subsidy program.
• If the parent’s or legal guardian’s total household income is less than or equal to 100% of the federal poverty level.

The credit will equal:

• $2,000 per child, if the total household income is no more than $75,000; or
• $1,000 per child, if the total household income is more than $75,000 but no more than $150,000.
• If the total household income is more than $150,000, the parent or legal guardian is not eligible for the child care refundable tax credit.

How to Apply

The application and supporting documentation will be used to certify the refundable tax credit. The applications will be used to reserve the tax credits for the individual to claim on their 2024 Nebraska individual income tax return. The applications will be processed in the order received until the annual limit reaches $15 million. Once applied, a response from the Department of Revenue could take up to 10 days. After the application has been certified, taxpayers may claim the reserved credit amount on the applicable line of their Nebraska Income tax Return. Taxpayers will need the Certification Number and Reserved Amount from the Estimated Credit Authorization section of their approved Form 7203 when claiming the credit on their 2024 Nebraska Individual income tax return.

Applications begin on January 2, 2025 and must be filed online at the following website using the Electronic Document & Application Submission Hub (eDASH). https://revenue.nebraska.gov/tax-credits/child-care-tax-credit-act/child-care-refundable-tax-credit.

HBE is here to help guide and support you through this process. If you have any questions about your eligibility or the application process, please reach out to your HBE trusted advisor.