Frederick County Council voted unanimously Tuesday night to increase its childcare tax credit from $3,000 to $10,000 to incentivize new providers.

Since it was introduced in 2024, no one has qualified — much less applied — for Frederick’s childcare tax credit, says county council member Renee Knapp. As one of the bill’s sponsors, Knapp hopes the amendments will make starting a business more affordable. “Hopefully this will incentivise individuals who want to start a home-based business, as well as commercial daycare providers and childcare providers, to use this tax credit to make improvements to their home,” Knapp explained.

The tax credit is weighed against the county’s property tax, and can be used to make improvements to a person’s home or business. The improvement must include an area “set aside and dedicated exclusively for a child care center.”

The funding is available for those who wish to operate a childcare center out of their own homes, as well as to commercial childcare centers. In addition, if a business has more than 25 employees, it may use the funding to provide on-site childcare.

Once attained, a provider can use the tax credit for a period of five years before reapplication. The funding cannot exceed the amount of property tax attributed to the portion of property the credit was granted to. While property owners can benefit from additional tax credits, the combined amount can not be greater than the net county tax.

Applications and renewals for the tax credit are due by October 1. If turned in late, they will be considered for the next taxable year.

Economic Impact

Across Frederick, more than 32% of county households live below the ALICE threshold, which stands for access limited, income constrained but employed. This number comes from United Way of Frederick County’s annual ALICE report. Families below the ALICE threshold live above the poverty line but are still unable to meet their basic needs.

Ken Oldham, CEO of United Way of Frederick County, said child care is one of the leading forces pushing families below the ALICE threshold.

In 2023, 80% of Frederick families were found to rely on childcare in order to work. A study found that childcare added 30 minutes to the commute of 38% of families. 46% spent more than $1,200 per month on services.

Both the study and the ALICE report show that women are disproportionately impacted by a lack of childcare. Knapp says, since the end of the Covid pandemic, Frederick’s lack of childcare has made it particularly difficult for women to return to the workforce. “It impacts economic output, especially for women who end up being, oftentimes, the caregivers in a home,” Knapp said.

Post-Covid

Knapp explained the county lost a great deal of home-based childcare providers during the Covid pandemic. Because these were people operating out of their own homes, Covid policies made things difficult. Many of those who went out of business were not able to re-open, she explained.

It is a matter of finding the right price point, Knapp argued, one that works for both the client and the provider. Perhaps even more than that, it may also be a matter of outreach and helping people know the option is there. “When I did research on updating the legislation…I reached out to Montgomery County,” Knapp said. “It’s also not well utilized in Montgomery County even though they’re much more populous.”

The childcare study shows that northern and southern Frederick County are facing a crisis level of childcare shortages. To further address the need for childcare in Frederick, the council has already passed bills allowing for childcare to be created in more diverse spaces.