New Hampshire lawmakers and Governor Kelly Ayotte celebrated the passage of the Child Day Care Tax Credit Program earlier this spring, calling it a meaningful step toward solving one of the state’s most persistent economic problems: a shortage of affordable, available childcare that keeps parents, particularly mothers, out of the workforce. But the people closest to the problem, the operators who run childcare programs across the state, say they are not convinced the new law will move the needle.
House Bill 1433, which has been sent to the governor for signature, creates a business tax credit program that allows companies to claim a credit of up to 50 percent of their expenditures against the state’s business profits or business enterprise taxes if they take steps to expand childcare access. Qualifying actions include creating 12 or more new childcare spots or paying an existing childcare program to do so.
As the New Hampshire Bulletin reported, providers say they are skeptical the law will produce the capacity increase it promises, pointing to a set of structural barriers that a tax credit alone does not address.
The Promise Behind the Bill
The legislation represents one of Governor Ayotte’s signature early priorities. Since taking office, she has pointed to childcare as a foundational economic issue, arguing that without accessible and affordable care, working parents cannot participate fully in the labor market, businesses cannot recruit and retain workers, and the state’s economy loses productive capacity it cannot afford to give up.
The business tax credit model is a market-oriented approach to a problem that has resisted easy solutions. Rather than directing state funds to childcare programs directly, the bill incentivizes private employers to invest in expanding access, either by partnering with existing providers to fund new slots or by creating care opportunities themselves. The idea is to leverage the resources of the business community and align corporate interests with a public need.
Business groups supported the legislation, and it passed with strong bipartisan backing in the Senate, where a committee approved it unanimously. The framing was straightforward: businesses that struggle to hire because workers cannot find childcare now have a financial reason to help solve that problem.
Why Providers Are Unconvinced
The enthusiasm in legislative chambers has not translated to the childcare sector itself, where operators say the tax credit model does not map well onto the realities of running a licensed childcare program.
The biggest obstacle is physical space. To create 12 or more new childcare spots, most existing programs would need to expand their buildings or relocate to larger facilities. Childcare centers are heavily regulated environments that require specific room layouts, square footage per child, outdoor space, and safety infrastructure. You cannot simply add a dozen children to a room that was designed for fewer: licensing requirements prevent it. Ellen Grudzien, founder of Let’s Grow Outside New Hampshire, told the Bulletin that expanding her program to meet the threshold would cost at least $150,000, money she does not have and cannot easily borrow.
For a childcare operator to benefit from the tax credit, they would need to attract a business partner willing to fund that expansion, wait for construction or renovation to be completed, bring the new space through the licensing process, and then hire additional staff to care for the children in those spots. That sequence of steps, each of which carries its own timeline and risk, is a significant undertaking even when the economic incentives are aligned.
The Workforce Problem the Bill Doesn’t Touch
Even if the physical infrastructure challenges could be cleared, providers point to a second, equally serious obstacle: they cannot find enough qualified workers to staff the programs they already have, let alone expand them.
New Hampshire’s early childhood education workforce has been under severe strain for years. The turnover rate in the sector ran at approximately 8 percent between 2023 and 2024, according to figures cited by providers and workforce advocates. The underlying cause is straightforward and stubborn: childcare workers are paid very little relative to the qualifications and responsibilities the job demands, and better-paying alternatives exist in nearly every sector of the economy.
Childcare teachers in New Hampshire earn wages that routinely fall near the bottom of the spectrum for jobs requiring comparable training and licensing. Many programs report that they are operating below their licensed capacity not because of space constraints but because they cannot hire enough staff to maintain the ratios required by state regulations. A childcare center licensed for 40 children may be serving 28 because it lacks the staffing to do more.
House Bill 1433 does not include any provisions to raise wages in the childcare sector, create career pathways for early childhood educators, or provide scholarships or loan forgiveness for people entering the field. The workforce dimension of the capacity crisis is left entirely unaddressed by the legislation.
Providers say this is where the gap between the bill’s ambitions and its likely effects is sharpest. Even if a business partner wrote a check tomorrow to build out a new wing of a childcare center, the question of who would staff it remains open. And in a tight labor market, convincing workers to take on the emotional demands of caring for young children at wages that cannot compete with retail, food service, or healthcare is an uphill battle.
The Broader Context of NH’s Childcare Shortage
New Hampshire has grappled with a childcare access problem for years, and the scope of the gap is well documented. The state has struggled with childcare workforce funding stalls affecting tens of thousands of children, and comparisons to neighboring states like Maine and Vermont have frequently shown New Hampshire lagging in its investments in the sector.
The economics of childcare do not naturally resolve themselves through market incentives alone. The cost of providing high-quality care, including qualified staff, safe facilities, appropriate materials, and regulatory compliance, is higher than most families can afford to pay. The gap between what parents can pay and what it costs to provide care has to be filled somewhere, and states that have made more progress on childcare access have generally done so by filling that gap with public investment, not tax incentives that leverage private capital.
New Hampshire’s political culture has made direct public subsidy a difficult path, which is part of why the business tax credit approach has appeal: it uses the tax code rather than appropriations, drawing on private resources rather than putting new line items in the budget. But that same indirect approach is also why providers doubt its ability to generate the scale of new capacity the state needs.
What Would Actually Help
Childcare providers and advocates have been fairly consistent in describing what they believe would make a meaningful difference. Workforce development funding that supports wage increases for early childhood educators is near the top of virtually every list. So is investment in facilities, including grants or low-interest loans that help programs expand their physical space without taking on debt they cannot service given the thin margins in the sector.
The New Hampshire Legislature has considered various approaches over the past several years, including zoning reforms that would make it easier to site childcare centers and grant programs to help programs cover operating costs. Some of those efforts have stalled or been significantly modified, reflecting the difficulty of building consensus around public funding for childcare in the current legislative environment.
Providers say they do not oppose HB 1433 and would welcome any partnership with businesses that results from the new tax credit. But they are calibrating their expectations. The structural challenges that make childcare a market failure in New Hampshire will not yield to a 50 percent business tax credit when the fundamental economics remain broken: low wages prevent adequate staffing, high capital costs prevent expansion, and thin margins leave programs unable to absorb either without outside help.
As the state continues to debate how best to address the childcare gap, the voices of the people actually running programs offer a useful reality check on the distance between legislative intent and operational outcome.
For related coverage, see our reporting on $9.3 Million in Federal Grants Lands in Rural New Hampshire.
