Child and Dependent Care Tax Credit 2026: What Parents Get

Updated November 2026. General information only, not tax advice.

The federal Child and Dependent Care Tax Credit gives back part of what you pay for daycare so you can work. For tax year 2026, the credit is 20% to 50% of up to $3,000 in care costs for one child, or up to $6,000 for two or more. That means a maximum credit of $1,500 for one child or $3,000 for two or more.

The top rate used to be 35%. The federal tax law signed in July 2025 raised it to 50% and changed how it phases down. You will claim the 2026 credit on the tax return you file in early 2027.

2026 credit rates by income

Your credit percentage depends on your adjusted gross income (AGI):

• AGI of $15,000 or less: 50%
• AGI from $15,000 to $45,000: drops 1 percentage point for every $2,000 above $15,000, down to 35%
• AGI from $45,000 to $75,000 for single filers, or up to $150,000 for married couples filing jointly: 35%
• Above $75,000 (single) or $150,000 (joint): drops 1 point for every $2,000 (single) or $4,000 (joint) above the threshold
• Lowest rate: 20%, reached at roughly $103,000 for single filers and about $206,000 for joint filers

The rules are in Section 21 of the tax code. Many families in the north and northwest Chicago suburbs have incomes above $150,000, so the rate for them falls somewhere between 20% and 35%.

Worked examples

Example 1: one child, AGI $90,000, married filing jointly

The family pays $20,000 a year for daycare. The credit counts up to $3,000 of it. At 35%, the credit is $1,050.

Example 2: two children, AGI $180,000, married filing jointly

AGI is $30,000 above $150,000. That is 7.5 steps of $4,000, rounded up to 8, so the rate drops from 35% to 27%. The credit counts up to $6,000. At 27%, the credit is $1,620.

Example 3: one child, AGI $40,000, single parent

AGI is $25,000 above $15,000, which is 12.5 steps of $2,000, rounded up to 13. The rate drops from 50% to 37%. The credit is 37% of $3,000, or $1,110.

Who qualifies

• Your child is under 13 when the care is provided.
• You paid for care so you, and your spouse if married, could work or look for work. Full-time students and spouses unable to care for themselves have special rules.
• If married, you file a joint return.
• You report the provider's name, address and taxpayer ID on IRS Form 2441.

What child care costs count

• Daycare centers and licensed home daycare
• Preschool and pre-K, when the main purpose is care while you work
• Before and after school care for school-age children
• Summer day camp, but not overnight camp
• A nanny or babysitter you pay properly

Kindergarten and school tuition itself does not count, because it is education. Care before or after the school day can count.

How the credit works with a dependent care FSA

You cannot claim the credit on money you already paid with a dependent care FSA. The FSA amount is subtracted from the $3,000 or $6,000 cap first.

In 2026 the FSA limit rose to $7,500 per household. That is already more than the $6,000 credit cap, so a family that fills its FSA usually has nothing left to claim for the credit.

Which is better? A simple way to compare:

• FSA savings = what you put in multiplied by your combined tax rate. For a family in the 22% federal bracket, that is about 34.6% once you add Illinois tax and payroll tax. On $7,500, about $2,600.
• Credit savings = your credit rate multiplied by up to $3,000 or $6,000. At 35% on $6,000, that is $2,100.

For most two-income families paying for full-time daycare, the FSA saves more. For lower-income families, the new 50% credit can be the better choice. If your employer does not offer an FSA, the credit is still there for you. Read more in our guide to the dependent care FSA for 2026.

Do not mix it up with the Child Tax Credit

The Child Tax Credit is a separate credit for having a child, whether or not you pay for care. Under the 2025 law it is $2,200 per child. You can claim both credits if you qualify.

Keep good records

• Ask your daycare for the legal name, address and taxpayer ID number when you enroll.
• Save monthly receipts or a year-end statement showing what you paid.
• Keep records of FSA reimbursements, so you do not count the same money twice.

Frequently asked questions

How much is the child care tax credit for 2026?

Between 20% and 50% of up to $3,000 in care costs for one child or $6,000 for two or more, depending on income. The maximum is $1,500 for one child and $3,000 for two or more.

Is the child and dependent care credit refundable?

No. It can lower your tax bill to zero, but you do not get money back beyond what you owe.

Does daycare tuition count for the credit?

Yes, if you paid it so you could work and your child is under 13.

Can I claim the credit and use an FSA?

Yes, but not on the same dollars. FSA money reduces the expenses you can count for the credit.

Child care at Children's Land

Children's Land offers full-day care from 6 weeks old through private kindergarten, open 7:00 AM to 6:00 PM at 12 locations in the north and northwest suburbs and Chicago. Learn about our preschool program, find a location, or contact us for current tuition.

Related reading: How Much Does Daycare Cost in Illinois? 2026 Guide.