Tax Credits

School Readiness Tax Credits for the Early Childhood Workforce and Step Up to Quality Program Participants

In 2016, the Nebraska Legislature passed LB 889 which created two new tax credits. One credit is for Nebraska’s early childhood professional workforce, and the second tax credit is for the quality early childhood programs that participate in Nebraska’s Step Up to Quality Program. These tax credits were enacted with the intent to support investment in quality early child care and education and increase access to quality early child care and education across the state of Nebraska. More information regarding the program tax credit can be found on the Nebraska Department of Revenue website after July 1, 2017.

The early childhood workforce tax credit is available for the 2017-2022 tax years to early childhood professionals who have attained the minimum qualification of a Child Development Credential (CDA) and who are employed in an early childhood program participating in Step Up to Quality. Additional early childhood professional development is required to be eligible for the tax credit. It is encouraged that early childhood professionals improve their knowledge and continue to seek professional development with the goal of enhancing and improving environments for children enrolled in quality programs.

The amounts of the refundable credit are based on the eligible staff member’s classification level as recommended by the Nebraska Department of Education. There are four classification levels (see chart below). The recommended classification is based on information self-reported and entered into Nebraska’s Early Childhood Professional Records System.

A tax credit attestation application must be completed in the Nebraska Early Childhood Professional Record System. The deadline for applying for the attestation of classification level is January 15, 2018. Once received, the eligible staff member can submit their claim to the Department of Revenue when filing their income tax return.

Classification Levels Chart

 PointsTax Credit
Level 1All Base Requirements$500
Level 27 – 9 Points$750
Level 310 – 12 Points$1,250
Level 413 – 15 Points$1,500

Point Determination

EducationPoints
CDA or one-year certificate/diploma in Early Childhood Education or Child DevelopmentBase Requirement
Associate’s Degree in Early Childhood Education3 Points
Bachelor’s Degree or above in a related field**4 Points
Bachelor’s Degree or above in Early Childhood Education or Child Development5 Points
TrainingPoints
12 clock hours of NDE verified/approved trainingBase Requirement
15 clock hours of NDE verified/approved training3 Points
24 clock hours of NDE verified/approved training4 Points
30 clock hours of NDE verified/approved training5 Points
Work ExperiencePoints
At least 6 months of employment in an eligible program* during the tax yearBase Requirement
At least 1 year experience working in an early care and education environment (including 6 month base requirement)3 Points
At least 2 years of experience working with children in an early care and education environment (including 6 month base requirement)4 Points
At least 3 years of experience working with children in an early care and education environment (including 6 month base requirement)5 Points

*Eligible programs are defined as ones participating in Step Up to Quality (at a Step 1 rating or higher). Applicant must have worked in an eligible program for at least 6 months during the tax year.

**Related fields include Elementary Education, Early Childhood Special Education, Social Work, Nursing, Psychology, Human Development & the Family, Family Consumer Science, Youth Development, Mental Health/Counseling.

Example

EducationEarly Childhood Teach with CDABase
Training24 hours of training4 Points
Work Experience3 years of experience
(including 6 months base requirement)
5 Points
Total9 Points
LevelLevel 2
Tax Credit$750

The tax credit will become available in the 2017 tax year to early childhood professionals who have attained at least the base requirements in the highest achievement in each category.