If you’re a parent or caregiver working or looking for work, you might benefit from a special tax break to offset the costs of care for your dependent.
The federal child and dependent care tax credit (CDCTC) is a nonrefundable credit designed to help recover expenses associated with caring for a child under age 13 or a dependent with disabilities.
You won’t receive the credit back as a refund even if the amount exceeds your tax liability. How much you get depends on how many dependents you have, your income, and the amount of eligible expenses you are claiming.
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There's some good news: The child and dependent care tax credit will be slightly higher beginning in 2026 under the Trump administration's newly enacted tax cuts and spending legislation.
Here’s what you need to know about who qualifies and what you can claim under the child and dependent care tax credit.
What is the child and dependent care credit?
The child and dependent care tax credit is a non-refundable tax break designed to help parents or caregivers reclaim some of the expenses related to caring for a qualifying child or loved one with a disability.
The credit amount is based on your income and a percentage of the expenses you’ve paid for the care of a qualifying child or dependent to help you go to work, look for work, or attend school.
One key note to remember is that you can only claim the CDCTC for qualifying expenses related to the care of a child or a dependent.
By contrast, the federal child tax credit (CTC) is a different tax break that can be used to pay for more than your children’s childcare. Parents have also used the CTC to pay for other essentials such as food, education expenses, shelter, utilities, clothing, and debts
2025 child and dependent care tax credit amount
The Child and Dependent Care Tax Credit can help working low- and middle-income households afford caregiving expenses for their loved ones.
- For tax year 2025 (taxes you'll typically file in early 2026), working households can claim a portion of child care expenses on their annual taxes – up to $3,000 for one child or qualifying dependent and up to $6,000 for two or more children.
- Qualifying expenses range from 20% to 35%, and your percentage depends on your adjusted gross income (AGI).
As an example, that means that a taxpayer earning $15,000 or less is eligible for a maximum credit worth 35%.
If you have one qualifying dependent, that means you can count up to $3,000 of work-related expenses for tax year 2025 (taxes you'll generally file in early 2026). However, your credit amount will be worth 35% or $1,050.
2026 child and dependent care tax credit amount is higher
The Trump administration's 2025 reconciliation law, referred to as the so-called 'One Big Beautiful Bill' expands the child and dependent care tax credit for some families starting in tax year 2026. That means taxpayers won't see the increase until they file their taxes in early 2027.
Here's what's changing with the CDCTC in 2026:
- Working parents can still claim a portion of child care expenses – up to $3,000 for one child or dependent ($6,000 for two or more qualifying dependents or children).
- What new: Starting in 2026, the CDCTC may reimburse up to 50% of your qualifying expenses.
- The Joint Committee on Taxation (JCT) estimates that the permanent change, which goes into effect in 2026, will cost $9.257 billion over the next decade.
As an example, that means that a taxpayer earning $15,000 or less is eligible for a maximum credit worth 50%.
If you have one qualifying dependent, you can count up to $3,000 of work-related expenses for tax year 2026 (taxes you'll generally file in early 2027). However, your credit amount will be worth 50% or $1,500 under the new law.
Who qualifies for the child and dependent care credit?
To qualify for the child and dependent care tax credit, your child or dependent must live with you for more than half of the year and:
- Be a child under the age of 13
- Is a spouse or dependent of any age who is physically or mentally incapable of self-care
To claim the child and dependent care credit you must have met the following requisites:
- You paid expenses for the care of a qualifying individual to enable you (and your spouse, if filing jointly) to work or actively look or work
- You (or your spouse, if filing jointly) lived in the United States for more than half the year. (Note: special rules apply to military personnel stationed outside of the U.S.)
- You (and your spouse) must have earned income from a job
Some exceptions: If one spouse is a full-time student or cannot work due to a disability, you can still claim the credit.
If you’re not sure if you may be eligible for the credit, you can check if you qualify using the IRS tool on IRS.gov. You’ll just need the date of birth for the child or dependent you are claiming and your filing status if you are married.
Limits on who can provide the care:
There are some limitations on the CDCTC based on who is providing the care. For instance, you can’t claim the credit if you paid:
- Your spouse
- A parent of the child being cared for
- A dependent on your tax return
- Your child age 18 or younger, regardless if they are claimed as a dependent on your tax return
Child and dependent care tax credit: Income limits for 2025
The child and dependent care tax credit amount depends on your income and the percentage of eligible care expenses, also known as work-related expenses.
For tax year 2025, qualifying expenses range from 20% to 35%, and your percentage depends on your adjusted gross income (AGI).
One factor to keep in mind: The child and dependent care tax credit is not adjusted annually for inflation. However, the federal child tax credit is indexed for inflation and the IRS announced the new 2025 child tax credit amount.
Adjusted gross income | Percentage of credit you can claim |
$0 to $15,000 | 35% |
Over $15,000 to $17,000 | 34% |
Over $17,000 to $19,000 | 33% |
Over $19,000 to $21,000 | 32% |
Over $21,000 to $23,000 | 31% |
Over $23,000 to $25,000 | 30% |
Over $25,000 to $27,000 | 29% |
Over $27,000 to $29,000 | 28% |
Over $29,000 to $31,000 | 27% |
Over $31,000 to $33,000 | 26% |
Over $33,000 to $35,000 | 25% |
Over $35,000 to $37,000 | 24% |
Over $37,000 to $39,000 | 23% |
Over $39,000 to $41,000 | 22% |
Over $41,000 to $43,000 | 21% |
Over $43,000 | 20% |
Source: Internal Revenue Service
So how do you calculate your child and dependent tax credit amount? Multiply the maximum allowable expenses (determined by the number of qualifying persons you are claiming) by the percentage that corresponds to your AGI.
For instance, if you have one qualifying dependent, and your AGI is under $15,000, the most your credit could be worth is $1,050. That’s 35% of the highest percentage allowable of $3,000 based on that one dependent.
Now, say you have multiple qualifying dependents and your adjusted gross income is $38,0000. In that case, the highest value of your credit is $1,380. That’s 23% of the maximum allowable credit of $6,000 based on multiple dependents.
Eligible child and dependent care expenses
Whether you are paying for a daycare, a nurse, or daily care expenses for a child or dependent, the child and dependent care tax credit will only cover qualified work-related expenses.
A work-related expense is the amount you or your spouse (if married and filing jointly) pay for the care of a qualifying person to allow you to work, or search for work.
Work-related expenses that qualify may be at your home or outside your home and include, but are not limited to:
- Nanny-share arrangements or daycare
- Preschool, nursery school, or similar programs below the level of kindergarten
- Day camp (Note: An overnight camp will not qualify as a work-related expense)
- Transportation via bus, subway, taxi, or private care (If a care provider takes a qualifying person for their care)
According to IRS Publication 503, you can also claim fees and deposits paid to an agency of a care provider, some medical expenses, and meals and lodging provided for a housekeeper.
How to claim the child and dependent tax credit on your return
You can claim the child and dependent tax credit by filing an IRS Form 1040, 1040-SR, or 1040-NR, and attaching a Form 2441 on your tax return. You must enter the credit on your Schedule 3 (Form 1040), line 2.
To be prepared at tax time, you should keep a record of your work-related expenses or any dependent care benefits received by an employer.
Additionally, if you have a household employee (someone that you pay regularly to come to your home and care for your child, dependent, or spouse) you will likely have to file a Schedule H (Form 1040), with your tax return and pay household employment taxes. You’ll also need an employer identification number (EIN).
However, if the individuals who come to your home to work are self-employed, they won’t be considered household employees and you won’t have to pay any employment taxes.
Does your state have a child and dependent care tax credit?
Separately, some states offer their own version of the child and dependent care tax credit.
As of 2025, 27 states and the District of Columbia provide a CDCTC, with varying rules on refunds. For more information, visit your state’s Department of Revenue website.
Also, make sure to take advantage of available family tax credits this upcoming tax season. The Trump administration recently expanded key tax breaks for families with children, including the Child Tax Credit (CTC) and the Adoption Tax Credit.
If you want to learn more about which tax breaks you may qualify for, speak to a certified tax accountant or professional.
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