What changed in 2026
The 2025 tax law made two childcare benefits bigger, starting with the 2026 tax year.
The 2025 tax law made two childcare benefits bigger, starting with the 2026 tax year.
The child and dependent care credit
You can count up to $3,000 of care costs for one child or $6,000 for two or more. The credit is now up to 50% of those costs for families with income of $15,000 or less. The rate steps down to 35%, and then to a floor of 20% for single filers with income above $103,000 and married couples above $206,000. Before 2026, most families got only 20%. The credit isn't refundable, so it can only reduce income tax you owe.
Dependent care FSA
If your employer offers one, you can now set aside up to $7,500 a year (up from $5,000) to pay for care before income and payroll taxes. Money you run through the FSA can't also be counted for the credit, so this calculator applies the FSA first and the credit to anything left over, up to the limits.
What the numbers don't show
Staying home can cost more than one year's pay: retirement savings, employer health coverage, raises and career growth all add up over time. On the other side, time with young kids and lower stress have real value too. Use the numbers as one part of the decision.
Sources
3 sources
Last checked October 2026. Amounts change every year.
- Tax Policy Center · 2026 credit rates and FSA limit
- IRS · Child and dependent care credit
- IRS · 2026 brackets and standard deduction