Employee-based Child Care Options

Federal Tax-Free Paymentsfor Child Care 

Federal Child and Dependent Care Tax Credit (CDCTC)

New Jersey Parent Child Care Tax Credit

Businesses can set up Dependent Care Assistance Plans, which are flexible spending accounts, that enable employees to set aside up to $7,500 per year in pre-tax salary for child care expenses.

When employers send employees their W-2 at tax time, remind them if they have children for whom they pay for child care services, employees can claim the CDCTC. 

For parents who utilize the federal CDCTC, New Jersey law allows parents a state tax credit for households with income of $150,000 or less. The amount of the credit declines as income rises (and phases out completely for families with income above $150,000).  The state tax credit for parents is refundable. Learn more here.