Employer-Provided Childcare Credits Jump in 2026
Businesses that provide childcare services to their employees could be eligible for a significant increase in the employer-provided childcare tax credit in the 2026 tax year.
The maximum employer-provided childcare tax credit, now capped at $150,000, will jump to $500,000 ($600,000 for eligible small businesses) for all tax years after Dec. 31, 2025, and will be adjusted annually for inflation, the IRS said in Revenue Procedure 2025-32.
The amount of the credit rate will also increase from the current 25% of an employer’s eligible childcare expenses to 40%. For qualifying small businesses, it will be 50%.
The change was authorized by the One Big Beautiful Bill Act (OBBBA) enacted in July and is among many OBBBA changes, 2026 rate schedule changes, and annual inflation adjustments affecting more than 60 tax provisions discussed in an IRS news update on Thursday.
A few of these other changes include:
Standard Deduction. For tax year 2026, the standard deduction increases to $32,200 for married couples filing jointly. For single taxpayers and married individuals filing separately, the standard deduction rises to $16,100 for tax year 2026, and for heads of households, the standard deduction will be $24,150.
Additionally, for tax year 2025, OBBBA raises the standard deduction amount to $31,500 for married couples filing jointly. For single taxpayers and married individuals filing separately, the standard deduction for 2025 is $15,750, and for heads of households, the standard deduction is $23,625.
Marginal Rates. For tax year 2026, the top tax rate remains 37% for individual single taxpayers with incomes greater than $640,600 ($768,700 for married couples filing jointly). The other rates are:
- 35% for incomes over $256,225 ($512,450 for married couples filing jointly);
- 32% for incomes over $201,775 ($403,550 for married couples filing jointly);
- 24% for incomes over $105,700 ($211,400 for married couples filing jointly);
- 22% for incomes over $50,400 ($100,800 for married couples filing jointly);
- 12% for incomes over $12,400 ($24,800 for married couples filing jointly).
- The lowest rate is 10% for incomes of single individuals with incomes of $12,400 or less ($24,800 for married couples filing jointly).