Childcare assistance for low-income workers is currently unavailable for new applicants in Tennessee because of federal funding cuts and unwillingness by state leaders to appropriate money for the program. No perfect solution exists for any employees, who are increasingly cost burdened by childcare, causing more employers to seek solutions for their workforce.
Childcare Resources for Employers
Childcare Subsidies or Vouchers
Provide employees with direct financial assistance toward licensed childcare costs; qualifies for the federal 45F tax credit. Starting in the 2026 tax year, the maximum credit rises to $500,000 ($600,000 for eligible small businesses), and the credit rate for childcare expenditures rises to 50% (60% for eligible small businesses). This credit applies when an employer builds, acquires, or contracts with a licensed childcare facility for employees.
Dependent Care FSA
Offer pre-tax payroll deductions for childcare expenses through your benefits plan. Employers can offer a Dependent Care FSA — a pre-tax benefit account employees use to pay for eligible dependent care. Employers can contribute up to $5,000 per employee, reducing the employee’s taxable income and the employer’s payroll tax burden.
Employer Child Care Navigator
A free tool that helps employers tailor childcare solutions for their workforce and build a comprehensive strategy
On-Site or Near-Site Micro-Center Resources
Host a subsidized childcare center on or near your facility:
United Way of Greater Knoxville (UWGK) — ALICE@Work
UWGK’s ALICE@Work initiative partners with local employers on strategies that build the resilience of lower-wage employees, with documented business benefits including reduced turnover, increased retention, and higher employee engagement. Employers can join the coalition or learn how to replicate its model.
Contact: Kaki Reynolds
YMCA of East Tennessee — Workplace Micro-Centers
Through UWGK’s Wise United grant, subsidized childcare “micro-centers” are being established at or near workplaces for children ages 6 weeks to 5 years. The YMCA staffs and manages these centers. The second site opened in December 2025 at Hillcrest Healthcare in North Knoxville.
Contact: Lori Humphreys
Tennessee Department of Human Services
TDHS offers grants to partnerships between childcare organizations and private employers for strategies that expand childcare access and capacity to serve the employer’s workforce. The goal is to expand current facilities or create new ones.