School Readiness Tax Credits - LB889

LB 889, the School Readiness Tax Credit Act (SRTC), introduced and personally prioritized by Senator Heath Mello and cosponsored by Senators Campbell, Cook, Kolowski, Kolterman, McCollister, Stinner and Sullivan, was modeled after a nationally recognized and successful package of tax credits in Louisiana to provide economic incentives directly linked to improvement in the quality of early childhood care and education programs and the early childhood workforce.

We are pleased to announce that LB 889 has become law with overwhelming support by the Nebraska Legislature, evidenced by a Final Reading vote of 45-2, followed by the signature of Governor Ricketts.

LB 889, as passed, includes two separate tax credits. One tax credit is targeted at supporting the early childhood professional workforce and the other is directed at supporting quality early care and education programs.

School Readiness Tax Credit for the Early Childhood Workforce

This tax credit will become available in the 2017 tax year to early childhood professionals who have attained the minimum qualification of a Child Development Associate Credential or a one-year certificate or diploma in early childhood education or child development, and who are employed in early childhood programs participating in Step Up to Quality. This credit encourages teachers and directors to improve their knowledge, skills, and abilities thereby enhancing the quality for the programs and enabling those programs to increase their Step Up to Quality ratings.

The amount of this refundable credit shall be based on the eligible staff member’s classification among 4 levels, to be defined by the Nebraska Department of Education, as follows:

Eligible Staff Member's Classification                                      Tax Credit

Level Four                                                                                            $1,500

Level Three                                                                                          $1,250

Level Two                                                                                             $750

Level One                                                                                             $500

School Readiness Tax Credit for Early Childhood Programs

This tax credit will become available in the 2017 tax year to early childhood programs participating in Step Up to Quality with at least a step three quality rating. Eligible programs must also serve low-income children through the state child care subsidy program. The value of the credit increases with a program’s Step Up to Quality rating and is designed to help address the higher expenses associated with providing higher quality services to low-income children.

This non-refundable credit shall be an amount equal to the average monthly number of children served through the state’s child care subsidy program who are attending the child care and education provider’s eligible program, multiplied by an amount based upon the quality scale rating of such eligible program as follows:

Quality Scale Rating of Eligible Program     Tax Credit Per Child Attending Eligible Program

Step Five                                                                                              $750

Step Four                                                                                             $500

Step Three                                                                                           $250

Step Two                                                                                              $0

Step One                                                                                              $0

Investments in quality early care and education programs have both immediate and long-term benefits to the individual child and society at large. Children from families of low-income who have access to high quality early childhood programs are less likely to be retained in grade, less likely to be referred to special education, less likely to go to jail, more likely to graduate high school, and more likely to attend college – all leading to higher earnings. The passage of LB 889 is a critical step forward to increasing access to quality early care and education across Nebraska to help us build a brighter future for young children and the early childhood professionals who care for them.



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