Texas · Employer-Provided Childcare Credit
Employer-Provided Childcare Credit in Texas (2026)
Employers can claim 25% of costs for employee childcare facilities and 10% of childcare resource/referral costs, up to $150,000. Texas has no state income tax, so a Texas filer's combined marginal rate on the next dollar at $67,321 of income is about 22% (22% federal).
2026 savings example for Texas
Planning estimate for a single filer earning $67,321 (Texas median household income in LevyIO's state dataset) who claims a $5,000 credit. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; TX tax uses the state brackets in LevyIO's dataset.
Estimated total savings
$5,000
Federal savings
$5,000
$5,981 → $981 · 22% bracket
TX state savings
$0
No state income tax
Combined marginal rate
22%
Credits do not depend on the bracket
Statutory maximum for this item in LevyIO's dataset: $150,000.
Federal × Texas marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The TX column is the state marginal rate at the midpoint of each range (Texas has no income tax). A credit saves its face value regardless of bracket.
| Federal bracket | Gross income (single) | TX marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 0% | 10% | $1,000 |
| 12% | $28,500 - $66,500 | 0% | 12% | $1,000 |
| 22% | $66,500 - $121,800 | 0% | 22% | $1,000 |
| 24% | $121,800 - $217,875 | 0% | 24% | $1,000 |
| 32% | $217,875 - $272,325 | 0% | 32% | $1,000 |
| 35% | $272,325 - $656,700 | 0% | 35% | $1,000 |
| 37% | Over $656,700 | 0% | 37% | $1,000 |
Eligibility & forms
Employers who provide childcare facilities or contract with childcare providers
- 25% of qualified childcare facility expenses
- 10% of qualified childcare resource and referral expenses
- Maximum credit $150,000 per year
Federal forms: Form 8882, Form 3800
Texas filing notes
No income tax saves significantly. High property taxes offset for homeowners. Texas offers residence homestead exemptions, additional age 65 or disabled exemptions, appraisal-value limits, and appraisal protest rights. Verify details with the county appraisal district.
Common mistakes: Not recapturing credit if facility use changes; Forgetting to reduce deduction by credit amount; Missing the resource and referral component.
Frequently asked questions
How much can the Employer-Provided Childcare Credit save a Texas taxpayer in 2026?
Credits reduce tax dollar-for-dollar. In LevyIO's example, a single filer with $67,321 of income (the Texas median household income in our state dataset) and a $5,000 credit would cut 2026 federal tax from $5,981 to $981, a $5,000 saving. Whether Texas offers a matching state credit depends on the TX return, so the estimate counts federal savings only.
What is the Texas income tax rate for 2026?
Texas has no state income tax. The TX standard deduction in LevyIO's dataset is $0 single / $0 married. No income tax (constitutionally prohibited). Second-highest property taxes (1.68%). High sales tax.
Who qualifies for the Employer-Provided Childcare Credit in Texas?
Employers who provide childcare facilities or contract with childcare providers. The federal rules are the same in every state; the requirements are: 25% of qualified childcare facility expenses; 10% of qualified childcare resource and referral expenses; Maximum credit $150,000 per year. Texas filers should confirm on the TX return whether the state follows the federal treatment.
Which forms do I file to claim the Employer-Provided Childcare Credit?
Federal: Form 8882, Form 3800. Texas has no individual income tax return for wage income, so there is no state form to file for this item. Common mistakes: Not recapturing credit if facility use changes; Forgetting to reduce deduction by credit amount; Missing the resource and referral component.
Employer-Provided Childcare Credit in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.