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Set up Vermont Child Care Contribution tax

by Intuit Updated 1 month ago

Learn how to set up QuickBooks Payroll to track Vermont Child Care Contribution.

Starting July 1, 2024, Vermont will implement a new Child Care Contribution tax, composed of a payroll tax on wages and self-employment income tax.

To learn more, review these resources:

How the tax works

  • All employers required to remit Vermont Income Tax Withholding are subject to the Child Care Contribution tax. Only federal agencies are exempt.
  • The contribution rate is set at 0.44% of employee wages. 
  • Employers can pay it entirely or may split the cost with employees
    • Employers must contribute at least 75% of the 0.44% contribution rate (e.g., 0.33%).
    • Employees can contribute a maximum of 25% of the 0.44% contribution rate (e.g., 0.11%
  • Employers may withhold any amount up to 25% or pay the entire Child Care Contribution tax. Employers aren't required to withhold the same amount from every employee.

Add Vermont Child Care Contribution to your employees

Select your product below.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Add your policy

  1. Go to Settings ⚙, and select Payroll settings.
  2. From Vermont tax, select Edit ✎.
  3. Under Vermont CCC, select Start.
  4. Select Define Rates.
  5. Enter your Policy Name.
  6. Select the effective start date of the policy. 
  7. Enter the percentages for you and your employees.
  8. Select Save.
  9. If you want to add another policy, select + Create contribution rates.
  10. Select Save, then Done.

Step 2: Add the policy to your employees

  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Tax withholding, select Edit.
  4. From State withholding, select + Assign policy.
  5. Select the policy name you set up in Step 1.
  6. Select Save, then Done.
  7. Repeat steps 2-6 for all other Vermont employees.

If you’ve run any payrolls before setting up this rate, don’t worry. We’ll automatically catch you up when you run your next payroll.

Step 1: Get the latest payroll update 

Download and install the latest payroll update. The Add Item Wizard for the new VT—Child Care pay item will launch when you pay your employees or add any new Vermont employees.  

Important: The Add Item Wizard will prompt you to enter the company and employee tax rates. See the How the Tax Works section above for details on calculating the contribution rate. 

Step 2: If needed -  Edit the new VT -  Child Care tax item to subject employees 

  1. Go to Employees and select Employee Center.
  2. Double-click your employee.
  3. Select Payroll Info.
  4. Select Taxes, then the Other tab. Look for and edit the new VT—Child Care item. 
  5. Select OK, then Save & Close.

Edit, or remove Vermont Child Care Contribution from your employees

Edit your policy

  1. Go to Settings ⚙, and select Payroll settings.
  2. From Vermont tax, select Edit ✎.
  3. Under Vermont Child Care Contribution, select Edit next to the policy you want to edit. 
  4. Edit the rate, then select Save.
  5. Select Save, then Done.

Remove the policy from your employee

See the How the Tax Works section above for details on calculating the contribution rate. You must pay the entire rate if you choose not to split the cost with your employees

  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Tax withholding, select Edit.
  4. From State withholding, look for the policy then select Unassign.
  5. Select Unassign to confirm action.

Change your employee or company percentage

  1. Go to Employees, and select Employee Center.
  2. Double-click your employee.
  3. Select Payroll Info.
  4. Select Taxes, then select the Other tab.
  5. Select the VT—Child Care item and update your rate.
  6. Select OK twice, then then Save & Close.
  7. Repeat the steps for each covered employee.

Edit your account number

  1. Go to Lists, then select Payroll Item List.
  2. Double-click the VT—Child Care item.
  3. Select Next until you get to the Agency for company-paid liability screen.  
  4. Enter or edit your account number. 
  5. Select Next.
  6. Verify your rate.
  7. Select Next, then select Finish.

Remove the policy from your employee

See the How the Tax Works section above for details on calculating the contribution rate. You must pay the entire rate if you choose not to split the cost with your employees. 

  1. Go to Employees, and select Employee Center.
  2. Double-click your employee.
  3. Select Payroll Info
  4. Select Taxes, then Other.
  5. Select VT—Child Care, then Delete.
  6. Select OK, then Save & Close.
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