Counties and municipalities now have a new tool to bolster child care options in their communities, thanks to newly passed legislation, HB 389 / SB 516 of 2025.
This new law, spearheaded by Delegate Julie Palakovich Carr and Senator Nancy King, enables local governments to grant property tax credits to child care providers — an innovative move to address the significant decline in child care availability across Maryland.
MACo Supports Local Flexibility for Child Care Investments
MACo strongly supported this legislation, recognizing the importance of locally driven solutions for workforce needs and economic stability. The law provides counties with an additional option to help child care providers, a critical component of local economies and community well-being.
The law permits local jurisdictions to offer property tax credits of up to $10,000 per property for real estate used as a child care center, family child care home, or large family child care home.
Additionally, the legislation empowers counties to provide up to $10,000 in tax relief for properties owned by businesses that offer on-site child care for employees, provided the business employs at least 25 individuals.
This expansion builds on the existing local authority to support child care providers through targeted tax incentives. Previously, counties could provide a real property tax credit of up to $3,000 annually for qualifying child care centers. The new law broadens eligibility to include “large family” child care homes and substantially increases the maximum allowable credit.
Why It Matters for Counties
According to a 2024 report by Comptroller Brooke Lierman, Maryland’s child care sector has seen a significant decline in child care providers in recent years.
This contraction has pressured working families, local economies, and the broader workforce. By enabling counties and municipalities to offer meaningful property tax relief, the law aims to stabilize existing providers and encourage new investments in child care infrastructure.
As federal uncertainty and State cost shifts continue to pressure local budgets, this locally driven solution allows counties to address community-specific needs without state mandates. This flexibility is critical as counties seek innovative ways to meet the rising demand for child care services while maintaining fiscal sustainability.
Useful Links
Property Tax – Day Care Centers, Child Care Homes, and Child Care Centers (HB 389 / SB 516 of 2025)