NYC’s Childcare Center Property Tax Abatement Is Back – With Bigger Benefits and More Time to Apply

On December 5, 2025, New York State enacted legislation that revives, extends, and significantly expands New York City’s Childcare Center Property Tax Abatement. For projects taking their first year of abatement in the 2025/26 tax year or later (tax years beginning on or after July 1, 2025), the maximum benefit is now much larger, and owners have an extra two years to apply.

At a high level:

• The regular Childcare Center Abatement cap increases to $350,000.

• The enhanced abatement for childcare centers in a “childcare desert” increases to $750,000.

• The application deadline is extended from March 15, 2025 to March 15, 2027.

• The law takes effect immediately and is retroactive.

For property owners, co-ops, condos, and childcare operators, this changes the math in a meaningful way, especially for larger build-outs and for sites located in childcare deserts.

Background: How the childcare center abatement works today

New York City’s Childcare Center Property Tax Abatement is a five-year property tax abatement for eligible projects that create new childcare centers or expand the capacity of existing centers.

Eligible projects

• The project must involve construction, conversion, alteration, or improvement completed on or after April 1, 2022 that either:

  • Creates a new childcare center, or

  • Increases the maximum number of children allowed in an existing childcare center.

• The childcare center must have a permit from the NYC Department of Health and Mental Hygiene (DOHMH).

Professional certifications

Applications must include determinations certified by a licensed engineer, architect, or certified public accountant regarding:

• The size of the premises;

• The costs incurred; and

• The reasonableness of those costs compared to similar childcare construction projects.

Base structure of the benefit

The abatement is equal to reasonable construction expenses associated with creating new childcare seats, subject to caps that depend on whether the property is in a childcare desert. The benefit is spread over five years and subject to per-year ceilings.

The new law keeps that overall structure but raises the caps and the annual limits for abatements first taken in 2025/26 or later.

What the new law changes

For abatements initially taken in a tax year commencing on or after July 1, 2025 (i.e., 2025/26 and later), the statute now provides:

1. Higher lifetime caps

• Regular abatement (non-desert locations)

  • Up to $35 per square foot, and

  • Up to $350,000 total.

• Enhanced abatement (childcare deserts)

  • Up to $75 per square foot, and

  • Up to $750,000 total.

These caps apply to the total project benefit that will be spread over the abatement period.

2. Higher annual limits

The law also increases the per-year limits:

• Regular abatement: up to $70,000 per year, but not more than the property’s tax liability for that year.

• Enhanced abatement: up to $150,000 per year, again capped by the property’s tax liability.

If the total allowable abatement exceeds these annual limits, the excess can be carried forward to up to four additional tax years, so the benefit can still be fully realized over time within the five-year abatement period.

3. Application deadline extended to March 15, 2027

Applications must still be filed by March 15 prior to the tax year in which the first abatement is claimed. The statute now allows applications through March 15, 2027 (instead of March 15, 2025).

For example:

• An application filed by March 15, 2027 would be for an abatement beginning in the 2027/28 tax year (July 1, 2027 – June 30, 2028).

4. Program end date

No childcare center abatements may be authorized for tax years commencing on or after July 1, 2032.

That end date is consistent with a five-year abatement period for projects that begin taking benefits in 2027/28.

5. Citywide budget cap remains

The City’s overall budget for this program remains $25 million. If approved abatements exceed this amount, individual benefits may be reduced.

Childcare deserts and the enhanced $750,000 benefit

To qualify for the enhanced abatement, the building must be located in a “childcare desert”—an area of the City where there are a disproportionate number of children under five compared to the number of available childcare slots, based on determinations by the New York State Office of Children and Family Services.

With the new law:

• A qualifying childcare desert project can now receive up to $750,000 over the abatement period,

• With up to $150,000 per year, subject to the property’s annual tax liability.

For larger build-outs, this may cover a significant portion of fit-out costs.

Program results so far – and why this matters

Since DOF started accepting applications in 2023, this abatement has been granted to 47 beneficiaries for the creation of approximately 3,500 childcare seats, totaling roughly $1,000,000 in abatements to childcare providers. However, the program remains underutilized.

Our team at Rosenberg & Estis, P.C. has seen firsthand how the program works in practice:
we represented four properties under the first version of the program, obtaining more than $500,000 in childcare center abatements for projects that created or expanded childcare facilities in New York City.

By increasing the caps and extending the filing window, lawmakers are trying to make the incentive more meaningful for owners and developers. Deepening the benefit is intended to encourage more property owners to partner with childcare providers to build and expand childcare facilities, and a later deadline gives more time to bring new centers online or expand existing ones.

Practical questions for owners and childcare providers

If you own or manage property in New York City, or operate a childcare center, it may be worth asking:

1. Have you completed qualifying work since April 1, 2022?

   • Interior build-outs, egress and safety upgrades, HVAC, plumbing, fire alarms, bathrooms, and similar work that was necessary to create new childcare seats may qualify.

2. Is your building in a childcare desert?

   • If so, the enhanced benefit of up to $750,000 (and up to $150,000 per year) may apply.

3. Is your DOHMH permit in place or in process?

   • A valid childcare permit is required for the abatement.

4. Can you support your costs with proper documentation and certifications?

   • You will need a licensed engineer, architect, or CPA to certify the premises’ size, costs incurred, and the reasonableness of those costs.

5. How does the five-year abatement fit into your property’s tax planning?

   • The abatement is non-refundable, but unused amounts (above the per-year cap) can be carried forward within the abatement period.

Next steps

In my earlier post, “NYC’s Childcare Center Property Tax Abatement: Creating More Seats for Families,” I outlined the original program and its early results. Crain’s New York Business also quoted me on how this tax break can help address both childcare shortages and underutilized commercial space in New York City.

With the new law now in place, owners, co-ops, condos, and childcare providers have more time and a larger benefit to work with—but the application, eligibility, and documentation rules remain technical.

If you are considering building out new childcare space, expanding an existing center, or you’ve already completed work since April 1, 2022, it may be worth reviewing whether your project can qualify for this expanded abatement and how it fits within your overall property tax strategy. Our team has experience guiding projects through this program and obtaining significant abatements under the first version of the law.