This bill creates a new, nonrefundable tax credit added as new sections to chapter 82.04 RCW and chapter 82.16 RCW that equals 100 percent of a taxpayer's costs for providing "child care assistance" to employees. The credit may not exceed the taxpayer's tax liability under the applicable chapter, refunds are not allowed, unused credit amounts may be carried forward for one calendar year, and a taxpayer may not claim the credit under both chapters for the same expenses. This is a new tax-credit law (not a penalty change) and includes procedural and administrative rules for claiming the credit. The department named to administer the credit (the bill text repeatedly refers to "the department" but does not identify it) must require an application based on qualifying expenditures from the previous calendar year, rule on applications within 60 days of receipt (with a possible extension if the applicant is notified and given an explanation), and require electronic filing of all returns, forms, and information in an approved format; filings are not considered filed until received electronically. The credit is effective January 1, 2026, may be earned through January 1, 2037, and the sections expire January 1, 2038. The act includes a tax preference performance statement, sets a target metric (a 15 percent increase in businesses providing child care assistance) for extension, and authorizes the Joint Legislative Audit and Review Committee to use state-collected data for review. "Child care assistance" under the bill is defined to include the portion of an employee's salary or wage provided by the employer to offset the employee's child care expenses, including tuition, and expenses related to the costs for the employer to provide in-house child care. Important context gaps in the extracted text include the identity of the administering department, a missing chapter number in the performance-statement reference, the absence of the application form or detailed qualifying-expenditure criteria, and no explicit caps or additional limitations on eligible costs beyond the rule that the credit cannot exceed tax liability.

If enacted, businesses that pay for employees’ child care or run in‑house child care can reduce what they owe under the specified state tax chapters by an amount equal to those qualifying child care costs, as long as the credit does not exceed their tax liability and no cash refunds are allowed. The credit is available for expenses incurred starting January 1, 2026 through January 1, 2037 (sections expire January 1, 2038), unused credit can be carried forward only one year, and employers must apply to the designated state department and file all required materials electronically; the department must decide on applications within 60 days unless it gives notice of an extension. This will most directly affect employers offering child care assistance and the employees who receive it: employers may be more likely to offer or expand such benefits because the full costs can offset tax bills, but employers with low tax liability get less immediate value since refunds are prohibited and carryforwards are short. It also creates administrative duties and timing risk for employers because the bill does not name which department will administer the credit, omits the referenced session chapter number, and does not provide the application forms or detail on qualifying expense caps or other limits, leaving key implementation details unclear.