State Legislature Expands Childcare Subsidy Program: What Durham Families Need to Know

The state legislature passed House Bill 847 on June 28, expanding the childcare tax credit programme to cover households earning up to $75,000 a year, up from the previous threshold of $55,000. The change takes effect September 1 and affects working parents across Durham who currently pay out-of-pocket for daycare, preschool, or after-school care.

Childcare costs in Durham have risen sharply over the past three years. The average cost of full-time centre-based care for a four-year-old now runs $18,500 to $22,000 annually, according to state childcare licensing data published in April 2026. For many families, that expense represents 25 to 35 percent of household income, forcing difficult choices between work and care. The bill addresses what local family services agencies describe as a growing affordability crisis affecting younger workers, single parents, and households where both parents work outside the home.

How the Expansion Works for Durham Residents

Under the new rules, eligible families will claim a credit of up to 30 percent of childcare expenses on their state tax return, capped at $3,600 per child annually. A Durham family earning $65,000 with two children in daycare would be expected to reduce their annual childcare costs by roughly $2,160, assuming average care prices in the region. Families earning between $55,000 and $75,000 will see their credit amount calculated on a sliding scale, with higher earners receiving slightly smaller percentages.

The expansion does not apply to families earning more than $75,000 or less than $20,000 annually. Households earning below the poverty line typically qualify for separate state and federal childcare assistance programmes operated through the Department of Social Services. Processing and claims will go through the state tax authority, meaning parents file for the credit when they complete their annual tax return.

Local childcare providers say the change may encourage more parents to formalise care arrangements rather than relying on informal family or neighbour arrangements. Three Durham-based childcare centres contacted for this report said they expect an uptick in enrolment once the September effective date passes and families receive information through schools and community organisations. Formal childcare also brings regulated safety standards and developmental programming that informal care does not provide, though the legislation itself does not mandate changes to provider operations.

Implementation and Next Steps

The state Department of Taxation will issue guidance in August 2026 on how families should document childcare expenses and claim the credit. Parents will need to provide provider names, addresses, and amounts paid. The department says the credit will appear as a line item on the standard state income tax form.

Advocates at local family resource centres estimate that 2,400 Durham households will become newly eligible for the credit under the expanded income threshold. The state budget allocated $28 million statewide for the expanded programme in the fiscal year 2026-2027, though final disbursement figures will depend on actual claims filed. Families should keep receipts and invoices from childcare providers to support their applications.

Questions about eligibility or how to claim the credit can be directed to the state tax authority website beginning August 1, or through Durham's Family Services Information Line, which operates weekdays from 9 a.m. to 5 p.m.