2026 tax rules
See what daycare may really cost you in 2026
See what daycare may really cost you in 2026 after federal tax breaks. New rules start in tax year 2026: the Child and Dependent Care Credit can now be up to 50% of eligible costs, and the dependent care FSA limit rises to $7,500.
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You’d pay about [TBD: $X] per year ([TBD: $Y] per week) after an estimated [TBD: $Z] in federal tax savings.
Estimate only, not tax advice. Rules used are shown below. Confirm with IRS Publication 503 or a tax professional.
The 2026 rules, in plain English
Child and Dependent Care Credit (federal)
- Covers up to $3,000 of care costs for one child under 13, or $6,000 for two or more.
- The credit is 50% of those costs if your adjusted gross income (AGI) is $15,000 or less. It drops 1 point per $2,000 of AGI down to 35% (reached at $43,000).
- It stays at 35% up to $75,000 AGI ($150,000 married filing jointly), then drops 1 point per $2,000 ($4,000 if joint) to a floor of 20% (above $103,000; $206,000 joint).
- Maximum credit: $1,500 for one child, $3,000 for two or more.
- It’s non-refundable: it can lower your tax to zero but won’t pay out beyond that.
Dependent care FSA / employer dependent care benefits
- From 2026 you can exclude up to $7,500 per household from income ($3,750 if married filing separately). Before 2026 it was $5,000.
- Your employer has to offer the plan and may set a lower limit.
- You can’t use the same dollars twice: FSA money reduces the costs that count for the credit. With $7,500 in an FSA, there is nothing left for the credit’s $3,000/$6,000 cap.
Sources: IRS, Child and Dependent Care Credit information; IRS, 2026 Instructions for Form 2441 (draft), phaseout schedule; 26 U.S.C. §21; IRS, Working Families Tax Cuts (OBBBA §70405). Checked October 23, 2026.
What does child care cost?
The average US price of child care was $13,128 a year in 2024 (Child Care Aware of America, Child Care in America: 2024 Price & Supply). Prices vary a lot by city, age and setting; infant care usually costs most. Use the quote from your provider in the calculator, not an average.
Texas help
If your income is lower, you may qualify for a Texas child care subsidy through the Texas Workforce Commission and your local Workforce Solutions board (twc.texas.gov/programs/child-care). The calculator doesn’t model subsidies.
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