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Procedures for Childcare Facility Tax Credit

Tax Incentives >
  • Procedures for Childcare Facility Tax Credit
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The Facility Tax Credit must be pre-certified through My Alabama Taxes before a childcare provider can claim the credit on their Alabama tax return. Precertification of this credit is a two-step process requiring taxpayers to first secure a credit reservation. Eligible childcare providers may begin requesting reservations on March 1. Those with an approved reservation must then submit a credit claim at the end of the tax year and include detailed documentation substantiating their claims.

Prerequisites for submitting a Facility Tax Credit reservation through My Alabama Taxes:

  • Taxpayer must be a for-profit childcare provider who owns and operates a qualifying childcare facility that provides childcare services to eligible children. Eligibility criteria can be found here.

Procedures for filing an online Employer Tax Credit Reservation through My Alabama Taxes:

  • Visit My Alabama Taxes and enter your credentials to login.
  • Once logged in, click on the Other Actions tab and select Reserve a Facility Tax Credit under Tax Incentives.
  • Facility Information: Complete the required fields and select Next.
    • Note! If you make a rural designation and you do not meet these criteria, your reservation request will be rejected, requiring a new submission. A map of qualifying rural (targeted) counties can be found here.
  • Reservation Amount: Enter the amount of credit you wish to reserve and select Next.
  • Review Submission: Please review the information in full (and print a copy of your records). Once reviewed, select Submit.

What to expect after the reservation is submitted:

Once your reservation is processed, you will receive a letter from ALDOR notifying you of the amount of reservation approved.  At the close of the tax year, taxpayers with an approved reservation will be required to submit documentation to support the reserved amount through a credit claim.

The credit awarded may be up to, but not exceeding, the reserved amount. Detailed instructions on how to submit a credit claim will be available by December 1, 2025. Should you have any questions or concerns, please contact incentives@revenue.alabama.gov or 334-353-9789.