Georgia State Childcare Tax Credit

What Is the Georgia Childcare Credit?

Georgia provides a state income tax credit for childcare expenses that supplements the federal Child and Dependent Care Credit. Under Georgia law, qualifying taxpayers can claim a credit equal to 30% of their federal Child and Dependent Care Credit on their Georgia income tax return.

Because it's tied to the federal credit, this is essentially a bonus credit that you receive automatically if you claim the federal credit — you just need to know to claim it on your Georgia return.

How the Georgia Credit Is Calculated

Note: In the example above, the FSA reduces the eligible expense base significantly. If the same family had no FSA access and the full $6,000 were eligible, the federal credit would be $1,200 and the Georgia credit would be $360. This illustrates the trade-off: FSA saves more in total (due to FICA savings), but leaves less for the federal/state credit.

How to Claim the Georgia Credit: Step-by-Step

• 1
  Complete your federal return first The Georgia credit is calculated from your federal credit. Complete IRS Form 2441 and determine your federal Child and Dependent Care Credit amount before moving to your Georgia return.
• 2
  File Georgia Form 500 Georgia residents file Form 500 for their state income tax return. If you use tax software (TurboTax, H&R Block, TaxAct), the software will automatically carry over your federal credit information to the Georgia return.
• 3
  Complete Schedule 2 (Other Credits) The Georgia childcare credit is claimed on Georgia Form 500, Schedule 2. Specifically, look for the line for "Child Care Credit" — it will ask for your federal credit amount, then calculate 30% automatically. In some years this appears on Form IT-213 (Child Care Expense Credit).
• 4
  Verify the credit applies to your Georgia tax liability The Georgia credit is non-refundable, meaning it can reduce your Georgia tax liability to zero but will not generate a state refund if the credit exceeds your liability. For lower-income families, check whether any portion may be refundable under current Georgia law.
• 5
  Keep records for 3 years Georgia may request documentation to verify your childcare expenses and provider information. Keep receipts, cancelled checks, and provider tax IDs (EINs) for at least 3 years after filing.

Georgia Employer Childcare Tax Credit

In addition to the family credit described above, Georgia offers a separate credit for employers who provide or subsidize childcare for their employees. This is relevant if you own a small business in Georgia.

Georgia Employer Credit (O.C.G.A. § 48-7-40.6)

• Employers who pay for employee childcare expenses can claim a credit of 75% of the first $100,000 in annual childcare expenses, plus 25% of the next $150,000
• Applies to direct childcare costs, childcare subsidies, and contributions to employee Dependent Care FSAs
• Credit is claimed on Georgia Form IT-CA
• Unused credits can be carried forward for up to 5 years

Income Limits and Phase-Outs

The Georgia state childcare credit does not have its own independent income phase-out — it follows the federal credit's structure. Because the Georgia credit is calculated as 30% of the federal credit, the same income phase-outs that affect the federal credit also reduce the Georgia credit proportionally.

AGI Range	Federal Credit Rate	Federal Credit (2 children)	Georgia Credit (30% of federal)
Under $15,000	35%	$2,100	$630
$23,001 – $25,000	30%	$1,800	$540
$33,001 – $35,000	25%	$1,500	$450
$43,001 and above	20%	$1,200	$360

These figures assume no Dependent Care FSA contributions. If you use an FSA, the eligible expense base for the credits decreases, reducing both federal and Georgia credits accordingly.

Stacking All Three Benefits: Maximum Savings Scenario

A Georgia family with two children, $75,000 household income, and no FSA access could claim the maximum available in all three buckets:

Now add a $5,000 Dependent Care FSA (saving approximately $1,480 in taxes at a combined 22% federal + 5.39% Georgia + 7.65% FICA rate), and total annual savings would exceed $3,000. The trade-off: using the FSA reduces the federal/state credit base, so the actual combined savings would be slightly different. Use the CloverMap Calculator to model your specific numbers.

Frequently Asked Questions About the Georgia Credit

Is the Georgia credit refundable?

Generally, the Georgia Child Care Credit is non-refundable — it can reduce your state tax liability to zero but will not generate a refund. However, lower-income families should verify with a Georgia tax professional, as Georgia has periodically offered refundable components for certain brackets.

Can I claim the Georgia credit if I'm self-employed?

Yes. Self-employed individuals who qualify for the federal Child and Dependent Care Credit can also claim the Georgia credit. You cannot use a Dependent Care FSA (which requires an employer), but you can claim both credits on your federal Schedule SE and Georgia Form 500.

What if I moved to Georgia mid-year?

Part-year residents may claim a prorated Georgia credit based on the portion of the year they were Georgia residents. Georgia Form 500 includes a part-year resident schedule for this purpose.

Where can I find Georgia's official instructions?

Visit the Georgia Department of Revenue website (dor.georgia.gov) and search for "Form IT-213" or "Child Care Credit" to access the current year's instructions and forms.