Hundreds of parents will receive an extra £746 to help pay for childcare before they start primary school.
Tynwald approved the Pre-School Credit Scheme in Tynwald last week, which is part of the government's new Childcare Strategy.
The credit will rise from £3,420 to £4,166 a year, to reflect the rise in average cost of childcare since it was last reviewed in 2018.
The move supports parents returning to the workplace.
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