As a business owner, you juggle a million things—inventory, payroll, customer satisfaction, and the ever-important quest to support your employees so they can be engaged and productive.

If you have parents with small children on your team, you know that the demands of parenting, coupled with rising childcare costs, can lead to absenteeism, decreased employee satisfaction, and even high turnover rates.

According to the Center for American Progress, 2.7 million working parents report making job changes due to child care challenges.

Fortunately, there are ways to support employees with childcare benefits. And when you pair them with tax benefits, affording these programs doesn’t require a magic wand or a vault of gold. Here are a few ways to affordably offer child care benefits to employees.

Offer a Dependent Care FSA

A Dependent Care Flexible Spending Account (DCFSA) is a pre-tax benefit account used to pay for eligible childcare services, including daycare, a babysitter or nanny, preschool, summer day camps, and before- or after-school programs.

Employees make pre-tax contributions to the account, so the money they set aside isn’t subject to payroll taxes. As long as they use the money to pay for qualified dependent care expenses, they can withdraw funds tax-free.

For 2025, employees can set aside $5,000 per year, or $2,500 if they’re married and file a separate tax return from their spouse.

Provide On-Site Child Care

Building an on-site child care facility might sound entirely out of your budget, but keep in mind you don’t need to foot the entire bill alone. Consider collaborating with other local businesses to create a shared daycare center or partner with existing ones.

The Employer-Provided Childcare Credit allows you to claim up to $150,000 annually to cover 25% of the cost of providing on-site childcare or contracting with a qualified off-site childcare facility. Alternatively, you can claim 10% of your expenses if you contract with a resource and referral service that helps working parents find a childcare provider.

By sharing costs and taking advantage of available tax benefits and resources, you make affordable child care feasible and community-friendly.

Embrace Flexible Work Schedules

If you are a parent, you know that having a flexible schedule is key when it comes to managing your work and family. Offering flexible work schedules and other family-friendly policies, such as remote work, can not only attract, but also retain, top talent and help reduce burnout and improve mental health.

When your team knows that you trust them to get their work done on a schedule that works for them, it provides a great level of empowerment. This is an inexpensive option with a significant impact.

Empower Employees to Claim Childcare Benefits

Sometimes, the best support is pointing someone in the right direction, so educate your employees about available tax credits and childcare benefits.

For example, employees can take advantage of the Child and Dependent Care Tax Credit for expenses beyond what you reimburse. The tax credit is 20% to 35% of qualifying childcare expenses, up to $3,000 for working parents with one child or $6,000 for employees with two or more children.

Build a Family-Friendly Workplace, One Step at a Time

Supporting employees with childcare benefits doesn’t have to break the bank. In fact, according to research from Boston Consulting Group, offering child care benefits delivers returns of up to 425% of their cost for U.S. companies across different industries, company sizes, and employee mixes.

With these strategies (or a combination of several), you can improve employee satisfaction and retention and cultivate a more supportive and family-friendly workplace culture. Offering these employee benefits can even become a competitive advantage when you’re competing for talent.

Remember, even small steps can lead to big changes. If you need help, reach out to NewWay Accounting. We’re happy to help you weigh your options and estimate the potential benefits!