3 Ways to Lower Your Child Care Costs in 2026

Although having children can be a source of great joy, paying for their care while you work is less than blissful. In 2024, the typical parent spent at least $9,600 on child care, with 22% of their household income going toward the costs, according to a study from Care.com, an online marketplace that connects families with caregivers. One-third of parents dipped into their savings to cover care expenses.

How big a bite child care takes from your own budget depends on several factors, including who provides the care, the cost of living in your area, and whether you're eligible for programs and resources that help reduce your expenses. As you navigate the balance of working and ensuring high-quality care for your child, consider these tips to take the edge off the costs.

Pick your provider.

The type of care you choose has a sizable effect on your expenses. Usually, you'll pay less to take your kids to day care than to have a nanny come to your home. The average weekly cost for a day-care center is $343 for an infant and $315 for a toddler, according to Care.com. The costs are similar for an in-home day care, at an average $344 for an infant or $319 for a toddler.

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Some day-care centers offer a sliding-scale fee, in which the price varies depends on the family's income. If you have more than one child in day care, ask the provider whether it offers a multi-child discount, says Anne Hedgepeth, senior vice president of policy and research at Child Care Aware of America, a nonprofit child-care assistance and advocacy organization.

Having a nanny come to your home while you work is convenient, and your child may receive more-focused attention than they would at a day-care center. But you'll usually pay significantly more. A full-time nanny's typical weekly rate to care for an infant is $827, or $858 for a toddler, according to Care.com.

Also, because a nanny is your employee, you have to withhold and pay tax if they earn more than a certain amount annually from their work for you; for 2025, it's $2,800, and for 2026, it's $3,000. You must pay your share of Social Security and Medicare (FICA) taxes — an amount equal to 7.65% of the nanny's wages — as well as federal and state unemployment taxes. Plus, you must withhold from the nanny's pay their share of FICA tax, which is 7.65% of wages. The nanny's earnings are subject to federal and state income tax, too.

To simplify the task of withholding and paying taxes, you can use a payroll service. Poppins Payroll ($49 monthly), for example, deducts tax from the nanny's pay, arranges direct deposit of paychecks into their bank account, and remits taxes to the government for you. Simple Nanny Payroll ($29 annually) helps you track taxes and figure out how much you owe, but you file and send tax payments yourself.

picture of a mother leaving the house and saying goodbye to nanny and child

One way to reduce costs is to create a nanny share, in which a nanny provides care for both your family and another family, says Sean Lacey, general manager of child care at Care.com. Each family typically pays two-thirds of the nanny's hourly rate. For example, if your nanny's rate is $27 an hour, you and the other family each pay $18 an hour, so the nanny receives $36 an hour total.

Another option is to hire an au pair, a care provider from outside the U.S. who lives with you for a set amount of time, usually a year. An au pair's rate may be lower than what you'd pay a nanny; the typical weekly stipend ranges from $195 (the minimum mandated by the U.S. Department of State) to $300, says Devon Kapler, executive director of au pair agency Go Au Pair. But you'll need to be comfortable with them staying in your home, and you must provide them a private bedroom.

You can find an au pair agency approved by the Department of State here. Au pair agencies handle logistics such as conducting background checks and setting up a J-1 work visa for the au pair, says Kapler.

Claim tax breaks.

You may be able to defray some of your care costs by claiming the child and dependent care tax credit, which is available if you paid for care for a dependent child who is younger than 13 while you worked or actively looked for work. Qualified expenses include day care, preschool, a nanny, day camps and after-school programs.

For the 2025 tax year, you can claim 20% to 35% of your child-care costs, up to a maximum of $3,000 in expenses for one qualifying child or $6,000 for two or more children. The percentage you can claim varies depending on your adjusted gross income. Those who make more than $43,000 are limited to claiming 20% of expenses; if your income is $15,000 or less, you can claim 35%. For the 2026 tax year, the maximum percentage for those earning $15,000 or less increases to 50%, and those with moderate incomes may be able to claim a larger percentage of expenses than in 2025. To claim the credit, file IRS Form 2441.

A father works on his laptop at the kitchen table while his young son sits on his lap

If your employer offers a dependent care flexible spending account (FSA), take advantage of it. You can save pretax money from your paycheck in an FSA to pay for qualified out-of-pocket care expenses for dependent children younger than 13. The annual contribution limit for the 2025 tax year was $5,000. However, thanks to changes in the One Big Beautiful Bill Act, signed into law last summer, you can stash away up to $7,500 per household in a dependent care FSA in 2026 ($3,750 if you're married and filing separately).

Note that you can't "double dip," claiming the same expenses that your FSA reimburses for the child and dependent care tax credit. But you can benefit from both. For example, for 2025, if you paid $7,000 in total care expenses for your two children and maxed out your FSA contribution at $5,000, you could claim $2,000 toward the child and dependent care credit.

Find local assistance.

Check whether you're eligible for state and local programs that reduce child-care costs. For example, New Mexico residents get free child care at state-approved day-care facilities (including eligible home-based day-care centers), after-school programs and summer programs, with no income requirements.

Some states offer free or subsidized pre-kindergarten programs. Florida, Oklahoma, Vermont and Washington, D.C., for example, enroll 4-year-olds in free pre-kindergarten regardless of their family's income. There's a patchwork of local free or reduced-cost programs across the country, too, such as New York City's free pre-K for 4-year-olds.

Child Care Resource & Referral offices provide information on local programs and resources; you can search for one near you with Child Care Aware of America's tool. The organization also offers fee-assistance programs for military families; learn more here. And at ChildCare.gov, you'll find a state-by-state resource guide, including tools to search for child care providers near you and information on financial-assistance options.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Ella Vincent is a personal finance writer who has written about credit, retirement, and employment issues. She has previously written for Motley Fool and Yahoo Finance. She enjoys going to concerts in her native Chicago and watching basketball.