Raising kids is expensive. Many of us began budgeting for our new babies before they even arrived, but few could have predicted just how rapidly the costs of child care would grow over the last few years.
According to the Care.com 2022 Cost of Care Survey, 72% say they spend 10% or more of their household income on child care, compared to 70% in pre-pandemic 2019. And more than half of families (58%) plan to spend more than $10,000 on child care this year, which is more than the average annual cost of in-state college tuition ($9,349) per EducationData.org.
The good news is there is probably a child care subsidy out there to help with these expenses. See which resources you could take advantage of to lower the costs of raising your child.
Government programs and subsidies
1. State assistance child care subsidies
The federal government provides money to individual states to help offset the costs of child care, but the aid available to families varies widely by state.
Many subsidies have strict income guidelines and are generally for families with children under 13. (The age limit is often extended if the child has a disability.) Be sure to check the requirements, because many subsidies permit home-based care, but some only accept a daycare center.
How to get it: Most assistance is administered through the Child Care and Development Block Grants. Scroll to the bottom of this article to find the contact information for your state. If you need to use an authorized provider, ask if they will put you in touch with an agency that can help you find one.
Some states distribute funds through social or health departments or agencies. For example, the Children’s Cabinet in Nevada can refer families to providers, help them apply for subsidies and can even help families who want to pay a relative for care. North Carolina’s Smart Start is a public/private partnership that offers funding for child care. Check the National Women’s Law Center for each state’s child care assistance policy.
2. Military family assistance
The federal government offers subsidies to members of the military and the Department of Defense. Eligibility is determined by each branch of service or agency.
How to get it: Visit Child Care Aware of America to find out the specific requirements for your branch or agency.
3. Child and Dependent Care Tax Credit
Working families can qualify for a tax break using the Child and Dependent Care Tax Credit. With this tax credit, you are able to itemize up to $3,000 in child care expenses per child ($6,000 maximum).
How to get it: When you file your personal income tax return, use IRS Form 2441 to itemize up to $3,000 in child care expenses per child ($6,000 maximum), which brings about $600 per child ($1,200 maximum) in tax savings.
If you have more than one child and have access to a Dependent Care Flexible Spending Account (FSA), the rules are slightly different.
“Families can’t use their FSA and Form 2441 for the same expenses,” says Tom Breedlove, director of Care.com HomePay. “So that’s why a family that has already set aside the maximum of $5,000 in their FSA can only claim $1,000 toward the Child and Dependent Care Tax Credit.”
If you do have an FSA, you can use Form 2441 for the additional $1,000 in child care expenses to save an additional $200.
4. Child Tax Credit
To maximize your money, make sure that you are also taking advantage of the Child Tax Credit. As soon as your child is born, you become eligible for the child tax credit of up to $2,000 for every child under the age of 16.
How to get it: Eligibility and the amount you can claim is dependent upon a few factors, so visit the IRS website to see if you qualify.
5. Earned Income Tax Credit
The EITC is a tax credit available to low- to moderate-income wage earners. The credit can range from a few hundred to several thousand, depending upon how many children you have and what your filing status is.
How to get it: Visit the IRS website to see if you qualify for EITC and how to file.
Employer child care subsidy programs
6. Dependent Care Accounts
The federal government offers this type of Flexible Spending Account through your employer. Like the Child and Dependent Care tax credit, families are eligible if both spouses are working or going to school and if their children are under the age of 13. If your job offers a Dependent Care Account, you can put aside up to $5,000 in pre-tax dollars to pay for child care expenses and save approximately $2,000 by contributing the maximum.
How to get it: Talk to your Human Resource department to see if a Dependent Care Account is available to you and how you can get started.
7. Child care network programs
Some larger companies have established relationships with child care providers and offer a discount to employees who use the providers from that network. Providers in these programs are typically available for both short- and long-term child care.
How to get it: Check with your Human Resource representative to see if this is something that your company offers.
Subsidy programs for students
8. School-sponsored subsidies
If you or your spouse is a student, your school may offer financial assistance for paying for child care. For instance, Oregon State University offers a plan that helps pay for various types of care. Some universities also offer low-cost, on-campus child care for eligible students.
Some states have grants for degree-seeking students to help pay for child care, but they’re often distributed through offices of varying names. In Massachusetts, the funds are issued through the Executive Office of Education; in Oregon, it’s through the Office of Student Access and Completion; and in Utah, it’s through the Office of Child Care.
How to get it: Because these programs are specific to each school, your best bet is to check with the individual college or university.
Other child care subsidy options
9. Sliding fee scales
Some child care centers offer a sliding scale or a scholarship for low-income families who can’t afford the regular rates.
How to get it: Investigate centers to find your top five, and then ask about rate options.
10. Sibling discounts
Some child care centers will offer a discount if you register an additional child.
How to get it: Once you have decided on your top five centers, ask about a sibling discount. If your older child is already attending daycare, ask if this is something they offer for additional children within the family.
Child care assistance grantee contacts by state & territory
- Alabama: Child Care Services Division, Alabama Department of Human Resources
- Alaska: Child Care Program Office, Division of Public Assistance, Alaska Department of Health and Social Services
- American Samoa: Child Care Division, American Samoa Department of Human and Social Services
- Arizona: Child Care Administration, Arizona Department of Economic Security
- Arkansas: Division of Child Care and Early Childhood Education, Arkansas Department of Human Services
- California: Early Education and Support Division (EESD), California Department of Education
- Colorado: Division of Early Care and Learning, Office of Early Childhood, Colorado Department of Human Services
- Commonwealth of the Northern Mariana Islands: Commonwealth of the Northern Mariana Islands, Department of Community and Cultural Affairs
- Connecticut: Bureau of Teaching and Learning, Office of Early Childhood, Connecticut Department of Social Services
- Delaware: Delaware Department of Health and Social Services
- District of Columbia: D.C. Office of the State Superintendent of Education
- Florida: Office of Early Learning, Florida Department of Education
- Georgia: Bright from the Start: Georgia Department of Early Care and Learning
- Guam: Division of Public Welfare, Guam Department of Public Health and Social Services
- Hawaii: Benefit, Employment, and Support Services Division, Hawaii Department of Human Services
- Idaho: Idaho Department of Health and Welfare
- Illinois: Division of Family and Community Services, Office of Early Childhood, Illinois Department of Human Services
- Indiana: Bureau of Child Care, Division of Family Resources, Indiana Family and Social Services Administration
- Iowa: Bureau of Child Care and Community Services, Division of Adult, Children and Family Services, Iowa Department of Human Services
- Kansas: Economic and Employment Services, Kansas Department for Children and Families
- Kentucky: Department for Community Based Services, Kentucky Cabinet for Health and Family Services
- Louisiana: Early Childhood Division, Louisiana Department of Education
- Maine: Office of Child Care Family Services, Maine Department of Health and Human Services
- Maryland: Office of Child Care, Division of Early Childhood Development, Maryland State Department of Education
- Massachusetts: Massachusetts Department of Early Education and Care
- Michigan: Child Development and Care Program, Office of Great Start, Michigan Department of Education
- Minnesota: Community Partnerships and Child Care Services, Minnesota Department of Human Services
- Mississippi: Policy and Programs Unit, Division of Early Childhood Care and Development, Mississippi Department of Human Services
- Missouri: Early Childhood and Prevention Services Section, Children’s Division, Missouri Department of Social Services
- Montana: Early Childhood Services Bureau, Montana Department of Public Health and Human Services
- Nebraska: Nebraska Department of Health and Human Services
- Nevada: Child Care and Development Program, Division of Welfare and Supportive Services, Nevada Department of Health and Human Services
- New Hampshire: Child Development Bureau, Division for Children, Youth and Families, New Hampshire Department of Health and Human Services
- New Jersey: Division of Family Development, New Jersey Department of Human Services
- New Mexico: Early Childhood Services Division, New Mexico Children, Youth and Families Department
- New York: Division of Child Care Services, New York State Office of Children and Family Services
- North Carolina: Division of Child Development and Early Education, North Carolina Department of Health and Human Services
- North Dakota: North Dakota Department of Human Services
- Ohio: Bureau of Child Care Policy and Technical Assistance, Office of Family Assistance, Ohio Department of Jobs and Family Services
- Oklahoma: Child Care Services, Oklahoma Department of Human Services
- Oregon: Office of Child Care, Early Learning Division, Oregon Department of Education
- Pennsylvania: Office of Child Development and Early Learning, Pennsylvania Departments of Human Services
- Puerto Rico: Puerto Rico Administration of Integral Child Care and Development
- Rhode Island: Family and Children’s Services, Rhode Island Department of Human Services
- South Carolina: Division of Child Care Services, South Carolina Department of Social Services
- South Dakota: Division of Child Care Services, South Dakota Department of Social Services
- Tennessee: Tennessee Department of Human Services, Citizens Plaza State Office Building
- Texas: Workforce Policy and Program Assistance, Workforce Development Division, Texas Workforce Commission
- U.S. Virgin Islands: Office of Child Care and Regulatory Services, U.S. Virgin Islands Department of Human Services
- Utah: Office of Child Care, Utah Department of Workforce Services
- Vermont: Child Development Division, Department for Children and Families, Vermont Agency of Human Services
- Virginia: Division of Child Care and Early Childhood Development, Virginia Department of Social Services
- Washington: Washington State Department of Children, Youth & Families
- West Virginia: Division of Early Care and Education, Bureau for Children and Families, West Virginia Department of Health and Human Resources
- Wisconsin: Division of Early Care and Education, Wisconsin Department of Children and Families
- Wyoming: Early Childhood Division, Wyoming Department of Family Services