Vermont Child Care Contribution Program Effective July 1, 2024
In the post-pandemic era, many state agencies have started to provide new benefits to employees that are offset by payroll contributions. The state of Vermont is the latest to add an employee benefit offset by payroll contributions by creating the Vermont Child Care Contribution program.
Starting July 1, 2024, the Vermont Department of Taxes will implement and administer a new Child Care Contribution tax, composed of a payroll tax on wages and self-employment income tax. The Vermont Department of Taxes has issued guidance here.
Key Provisions:
All employers required to remit Vermont Income Tax Withholding are subject to the Childcare Contribution tax. Employers are required to remit this tax for all employee wages for which they are required to pay Vermont Income Tax Withholding. The Childcare Contribution tax will be paid on the same schedule as your Vermont income tax (semi-weekly, monthly, or quarterly) and then reported quarterly on the VT-WH436. The contribution rate is set at 0.44% of employee wages.
- Employers with one or more employees are subject to the childcare tax.
- Employers may split the cost with employees
- Employers must pay a minimum of 75% of the 0.44% contribution rate.
- Employees can contribute a maximum of 25% (i.e., 0.11%) of the 0.44% contribution rate.
Note: Employers may withhold up to 25% or pay the entire Child Care Contribution tax. Employers are not required to withhold the same amount from every employee.
How will QuickBooks support this new Child Care Contribution Tax?
QuickBooks is working on incorporating the new Child Care Contribution tax into our Online and Desktop Payroll platforms. We anticipate launching the feature to set up and track this new tax towards the end of May. Once this feature is available in your QuickBooks Payroll account, we will promptly notify all QuickBooks Payroll customers.
QuickBooks Payroll customers should look out for our follow-up communications in May, when we will provide the steps for setting up this new tax in QuickBooks.
