Just over two months after Texans voted to allow local governments to waive property taxes for child care centers, Austin City Council locked in the opportunity for a 100% local tax break for those facilities.

The big picture

Soon after the approval of Proposition 2—the tax exemption measure—last November, Austin officials sought to move forward with that update to benefit child care centers across the city.

Following a final vote on the update in January, qualified facilities can now be exempted from paying city property taxes starting in the 2024 tax year.

“Austin is now the first municipality in Texas taking action, demonstrating a commitment to children, families and the essential child care sector. This action will provide some relief to child care centers whose businesses operate, as we know, at very thin margins, and they’re facing very much higher costs for their rent and their mortgages," council member Alison Alter said Jan. 18.

The details

To be eligible for the new tax break, child care operators must:
  • Be licensed by the Texas Health and Human Services Commission
  • Participate in the Texas Workforce Commission Rising Star Program
  • Have at least 20% of enrolled children subsidized in the workforce commission program
An application for the tax exemption must be submitted to a facility's relevant appraisal district.

Last year, city officials also asked to identify ways to support homebased child care operators in addition to licensed facilities. Alter said that update could be ready in the spring.

Also of note

Council's move to quickly adopt the new state allowance follows other recent actions aimed at improving child care access in Austin, including a push to make it easier to build care facilities.

Officials have also expressed concerns about a lack of access to quality child care given financial concerns many such facilities and programs are now facing, especially following the peak of the COVID-19 pandemic.

Alter said she and other council members are now working to roll out additional investments in the child care space in the near future.

What they're saying

“The reason why this matters is that we know and we’re serious about addressing affordability in Austin. Part of that is ensuring that every family has access to high-quality, affordable child care throughout the city," council member Vanessa Fuentes said.

“Child care is one of the most expensive things that Austinites have to pay for, so I really appreciate any opportunity we get to offer that support as a body," council member Natasha Harper-Madison said.