Child and Dependent Care Credit: Getting Back Part of What You Paid
If you pay a daycare, an after-school program or a sitter so you can work, the IRS will cover part of that bill through the Child and Dependent Care Credit. For 2026 returns, filed in 2027, the credit gets bigger, especially for lower-income families. Here's who qualifies, what counts and how the new 2026 rates work.
AT A GLANCE
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What changed for 2026
The Working Families Tax Cuts law raised the credit starting with tax year 2026. These returns are generally filed in 2027.
2025 returns | 2026 returns | |
|---|---|---|
Top credit rate | 35% | 50% |
Lowest rate | 20% | 20% |
20% floor starts above | $43,000 AGI | $103,000 AGI, or $206,000 for joint filers |
Expense limit | $3,000 / $6,000 | $3,000 / $6,000 (unchanged) |
Employer dependent care benefit exclusion | $5,000 | $7,500 (married filing separately: $3,750) |
The expense limits didn't change. What changed is the share of those expenses you get back, plus the income levels where that share starts to shrink.
Eligible taxpayers may now claim a credit for up to 50% of qualifying child and dependent care expenses, up from 35% in previous years. (IRS)
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The five tests you have to pass
IRS Publication 503 lists tests you must meet. If you miss any one of them, you can't take the credit.
1. Care for a qualifying person
A qualifying person is:
Your qualifying child who's your dependent and was under 13 when the care was given
Your spouse who couldn't physically or mentally care for themselves and lived with you more than half the year
Another person who couldn't care for themselves, lived with you more than half the year, and was your dependent (or would have been, except for a few technical reasons)
The IRS says someone can't care for themselves if they can't dress, clean or feed themselves because of a physical or mental disability, or if they need constant attention to keep from hurting themselves or others.
Status is checked day by day. If your child turns 13 on September 16, count only expenses through September 15.
2. You have earned income
You, and your spouse if filing jointly, must have earned income. That's wages, salaries, tips and other taxable pay, plus net self-employment earnings.
These don't count as earned income: unemployment benefits, Social Security, pensions, workers' compensation, child support, interest and dividends, and nontaxable workfare payments.
There's an exception if your spouse is a full-time student or can't care for themselves. For each month that applies, the IRS treats them as earning at least $250, or $500 if you have two or more qualifying persons. To count as a full-time student, they must be enrolled full-time for some part of five calendar months. Online-only schools don't count.
3. The care lets you work or look for work
The expense must let you work. Paying a sitter for a date night doesn't count. Full-time or part-time work both count, and so does running your own business.
Looking for work counts too, but if you never find a job and have no earned income for the year, you can't take the credit. Unpaid volunteer work doesn't count.
4. You file the right way
You can file as single, head of household or qualifying surviving spouse. Married couples generally must file jointly.
If you're married but living apart, the IRS treats you as unmarried for this credit if all of these are true:
You file a return separate from your spouse
Your home was a qualifying person's home for more than half the year
You paid more than half the cost of keeping up the home
Your spouse didn't live in your home during the last six months of the year
5. You identify the provider
You must list each care provider's name, address and taxpayer ID number on Form 2441. For a person, that's their SSN or ITIN. For a business, it's their EIN. If the provider is tax-exempt, like a church or school, write "Tax-Exempt" instead of a number.
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What counts as a care expense
Usually counts | Usually doesn't count |
|---|---|
Daycare, nursery school and preschool | Kindergarten or higher-grade tuition |
Before- and after-school care | Summer school and tutoring |
Day camp, even sports or computer camp | Overnight camp |
Transportation by the care provider to and from care | Your own driving to drop the child off |
Agency fees, preschool deposits, application fees | A deposit you forfeit when care isn't given |
Care in your home, such as a nanny | Food, clothing, education and entertainment |
Care at a dependent care center counts only if the center follows state and local rules. The IRS defines that as a place caring for more than six people who don't live there, for a fee.
Paying a relative
You can count payments to a relative who isn't your dependent, even if they live with you. Grandma watching the kids can count. You can't count payments to:
Anyone you can claim as a dependent
Your child under 19 at the end of the year
Your spouse
The other parent of your qualifying child under 13
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How the 2026 credit is figured
Start with your care expenses, then cap them at the smallest of:
What you actually paid, minus any reimbursements
$3,000 for one qualifying person or $6,000 for two or more
Your earned income, or the lower-earning spouse's earned income if you're married
Multiply that by your percentage. Under the draft 2026 Form 2441 instructions, it's 50% if your AGI is $15,000 or less, then drops one point for every $2,000 until it reaches 35% above $43,000. It stays at 35% up to $75,000, or $150,000 for joint filers. Then it falls again until it hits the 20% floor.
Examples using the 2026 table
Situation | Expenses used | Rate | Credit |
|---|---|---|---|
Single parent, 1 child, AGI $40,000, paid $4,000 | $3,000 | 37% | $1,110 |
Married, 2 kids, AGI $90,000, paid $9,000 | $6,000 | 35% | $2,100 |
Married, 2 kids, AGI $160,000, paid $6,000 | $6,000 | 32% | $1,920 |
These are figured from the draft 2026 phaseout table. Your real credit also can't be more than your income tax for the year.
Why lower-income families can come up short
Since the credit isn't refundable, a family that owes little or no federal income tax may not get much of the 50% rate. If that's you, it's still worth claiming, and also worth checking whether you qualify for the Earned Income Tax Credit.
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Employer dependent care benefits
If your job offers a dependent care FSA, the money you put in reduces the expenses you can use for this credit. You can't count the same dollars twice.
Starting in 2026, employers can raise the dependent care exclusion to $7,500. The draft instructions warn that if you exclude at least the $3,000 or $6,000 limit, you can't take the credit at all. Exclude the full $7,500, and the credit is gone.
The same rule applies to reimbursements from a state social services agency. In IRS's example, $3,000 of care minus a $2,000 agency reimbursement leaves only $1,000 for the credit. If you get a child care subsidy, count only your share of the cost.
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Paperwork that protects your credit
Ask for Form W-10. This is the IRS form for getting a provider's name, address and taxpayer ID. A copy of their Social Security card or a recent invoice showing their tax ID also works.
Keep it with your records. Don't send W-10 to the IRS.
If a provider won't give their number, fill in what you have on Form 2441. Write "See Attached Statement" in the blank spaces and attach a note saying you asked and they refused. The IRS calls this showing due diligence.
Keep receipts for what you paid. If your dependent or spouse can't care for themselves, keep records of the disability too.
A nanny in your home
If you pay someone to work in your home and you control how the work is done, they're probably a household employee. You may need to file Schedule H and pay household employment taxes. A provider who cares for your child in their own home or business usually doesn't make you a household employer.
BEFORE YOU FILE YOUR 2026 RETURN
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More help
Related guides
Official sources
Last checked: October 30, 2026. The 2026 rates and limits come from the IRS credit information page and the draft 2026 Form 2441 instructions. The eligibility tests, expense rules and provider rules come from the 2025 edition of Publication 503.
The 2026 phaseout table comes from a draft IRS document and could change before the final version. This is general information, not tax advice.
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