Setting up Vermont's Child Care Contribution in QuickBooks Payroll
Vermont's 0.44 percent child care payroll levy caught QuickBooks users off guard in July 2024; this report covers the rates, the setup screens, and fixes.
Vermont’s Child Care Contribution took effect on July 1, 2024, landing mid-year while pay schedules were already running. Employers who opened QuickBooks expecting an obvious Vermont line item found the settings tucked away and the employee assignment anything but automatic. The sequence that closed community threads runs in two passes: define the rates once for the company, then attach the resulting policy to each covered employee by hand.
Who owes the contribution?
The obligation tracks unemployment-insurance coverage rather than income-tax withholding, a distinction that tripped up more than one discussion. If you pay into Vermont’s unemployment system, the levy applies to the wages you pay, and federal agencies are the only exemption. The distinction matters for anyone who withholds Vermont income tax without a Vermont unemployment account: the unemployment test governs. The statute also reaches self-employment income, which individuals settle on their own returns rather than through payroll.
The rate and the split you control
The contribution equals 0.44 percent of wages. You must cover at least 75 percent of it, which works out to 0.33 percent, and you may fund the rest by withholding up to 0.11 percent from employees. Paying the entire amount yourself, with nothing withheld, is equally allowed. The withheld share does not need to match from one employee to the next, a flexibility few payroll taxes offer. You can take nothing from one person and the full 0.11 percent from another.
Online setup runs in two passes
The steps here cover the browser-based QuickBooks Payroll service; Desktop follows in the next section.
The first pass sets the company rates. Open Settings, choose Payroll settings, and pick Edit beside Vermont tax. Under the child care heading, select Start, then Define Rates. Name the policy, choose its effective start date, and enter the two percentages, yours and the employee’s. If you plan to withhold different shares for different groups, create a second set of contribution rates here as well. Finish with Save, then Done.
The second pass is per employee. From All apps, open Payroll, then Employees, and select the first person. Under Tax withholding, choose Edit; under State withholding, select Assign policy and pick the name you created. Repeat for every Vermont employee. Nothing applies on its own, and several long threads trace back to that one missed step.
QuickBooks Desktop takes a per-employee route
Desktop handles the item differently, and the work lands on each employee record. Open Employees, then Employee Center, and double-click the first person. Select Payroll Info, then Taxes, then the Other tab. Edit the VT Child Care item, set the rate, and confirm with OK and Save and Close. Every covered employee needs the same treatment.
One screen deserves a stop before your first payment. Open Lists, then Payroll Item List, and double-click the same item. Step through with Next until you reach the page where you name the agency that receives the company-paid share. Enter your state account number, verify the rate on the following page, and step through to Finish. You can return to this same list route later to correct the number.
Changing, correcting, or removing a policy
In the online service, rate changes happen at the policy. Edit the child care policy in Payroll settings, adjust the percentage, and save; assigned employees keep their links. To detach someone, open that person’s State withholding, find the policy, and select Unassign, then confirm. Removing and reassigning a different policy follows the same path you used at setup.
Desktop has no central policy to adjust. You edit the rate on each employee’s Other tab, select OK twice, then Save and Close, and move down the list. Removing the item entirely follows the same route: open the employee’s Taxes area, select the Other tab, choose the VT Child Care item, and pick Delete.
The short version
Define the split once, attach it per person, and, in Desktop, confirm the agency account number before paying. The percentages are fixed by statute; everything else is one-time setup you revisit only when a rate moves. Skip the employee-level step and the tax simply never appears on a check, which is how most of these reports began.