Listening to providers: Improving the School Readiness Tax Credit application experience

School Readiness Tax Credit

Over the past several months, First Five Nebraska has collected feedback from child care professionals across the state about their experiences applying for the School Readiness Tax Credit (SRTC). We’ve gathered this input through online surveys, social media discussions and in-person conversations with early childhood educators.

For nonrefundable School Readiness Tax Credit applicants, we are happy to report that an administrative fix is underway at the Nebraska Department of Health and Human Services to make it easier for providers to report accurately on the number of children served through the subsidy.

However, input from individual child care professionals who applied for the refundable School Readiness Tax Credit reveals significant, unresolved challenges in the application and review process—particularly for applications submitted after the start of 2025. These shortcomings have created unnecessary stress and uncertainty for the very professionals this credit was designed to support. 

Background on the School Readiness Tax Credit
Nebraska’s School Readiness Tax Credit was originally piloted in 2017, with $5 million in refundable and nonrefundable credits available. By the time the program concluded in 2021, only about 17% of the credits had been claimed.

In 2023, state lawmakers revived and expanded the credit, setting an annual cap of $7.5 million for income tax returns beginning in 2024. The updated legislation directed the Nebraska Department of Revenue (NDOR) to issue credits on a first-come, first-served basis until the cap was reached. NDOR anticipated a six-week processing timeline for credit applications. 

While we are hopeful that the Legislature will consider raising the annual cap in the future to allow more child care professionals to benefit, it is equally important that the credit be administered with transparency, consistency and fairness.  

This week, First Five Nebraska shared the following summary of concerns directly with NDOR to request clear answers and advocate for improvements in the refundable School Readiness Tax Credit application process. We have urged the Department to be forthcoming with its own information and clarifications to ensure clarity, efficiency and confidence in that process. 

Key concerns identified by child care professionals
1. Fairness of the first-come, first-served system|
Some providers who submitted applications early in 2025 report that they received responses after their peers who applied later or have yet to receive a response at all. This contributes to a sense of inconsistency and lack of confidence in the first-come, first-served process.
 Questions:
 Was the first-come, first-served system consistently followed throughout the review process?
 Why did some applicants receive responses before others who submitted earlier?

2. Lack of transparency in the review process
Many applicants were left in the dark about their application status. While some were able to reach NDOR by phone for updates, others indicated they could not get any information at all.
Question:
Why did some applicants have access to status updates while others seemingly did not? 

3. Delays in processing applications
Although NDOR initially projected a six-week turnaround, many providers reported waiting as long as four months. As of May 25, some were still awaiting word on their applications.
Questions:
Why did application reviews extend far beyond the anticipated six-week period?
What steps will NDOR take to ensure more timely processing in the 2025–2026 tax season? 

4. Outdated authorization table
NDOR’s online table tracking authorized credits was not updated consistently. As of June 5, it had not been updated since March 25—despite applicants receiving letters indicating the $7.5 million cap had been reached.
Question:
Will NDOR update the authorization table more regularly to accurately reflect the funds requested and authorized for 2025? 

5. Impact on tax filing decisions
Due to delays, NDOR advised applicants to either (1) file tax returns without claiming the credit and amend later if approved, or (2) claim the credit without confirmation, risking processing delays. Many providers instead chose to file for extensions while awaiting notification.
Observation:
This uncertainty placed providers in a difficult position during tax season, adding to the administrative burdens they face. 

Looking ahead
The School Readiness Tax Credit is an important tool to recognize and support early childhood professionals who play a vital role in strengthening Nebraska’s workforce and economy. However, the administration of this program must reflect the professionalism these educators bring to their work every day. 

First Five Nebraska remains committed to working with state agencies to ensure the program lives up to its legislative intent. We will continue advocating for improvements that prioritize equity, clarity and respect for the time and contributions of our state’s child care professionals. 

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