Tynwald has voted to replace the pre-school credit system after 12 years.
The Childcare Credit Scheme 2024 was approved yesterday, and means children who turn three or four each academic year get £4,166 in childcare credit.
Parents will be able to spend the credit with government-registered providers.
Education Minister Daphne Caine says the scheme forms part of the government's Our Island Plan and Childcare Strategy.
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