Child and Dependent Care Credit 2026: Now Worth Up to 50%
The tax credit for daycare, babysitters, and summer camp got its first major increase in decades. Starting in 2026, families can get back up to 50% of $3,000 in care expenses for one child, or $6,000 for two or more. That is up to $1,500 or $3,000 off your tax bill.
This is not the child tax credit
People mix these up constantly, and they are completely different. The child tax credit is $2,200 per child under 17 and you get it just for having kids. The child and dependent care credit pays you back for money you spend on care so you can work. Daycare, a babysitter, a nanny, after-school programs, day camp in the summer. You can claim both credits on the same return.
What changed for 2026
The One Big Beautiful Bill raised the maximum credit rate from 35% to 50% starting with tax year 2026. The change is permanent. The expense caps stay the same: $3,000 of care costs for one qualifying person, $6,000 for two or more. What changed is the percentage of those costs you get back.
The rate depends on your income. Lower incomes get the full 50%. Higher incomes step down to a 20% floor, and nobody gets less than 20%.
Credit rate by income for 2026
| AGI (single) | AGI (married joint) | Credit rate | Max for one child | Max for two+ |
|---|---|---|---|---|
| $15,000 or less | $30,000 or less | 50% | $1,500 | $3,000 |
| $25,000 | $50,000 | 45% | $1,350 | $2,700 |
| $43,001 to $75,000 | $86,001 to $150,000 | 35% | $1,050 | $2,100 |
| $85,000 | $170,000 | 30% | $900 | $1,800 |
| Above $103,000 | Above $206,000 | 20% | $600 | $1,200 |
The rate falls by 1 point for every $2,000 of AGI above $15,000 until it reaches 35%. It holds at 35% until $75,000 for single filers or $150,000 for joint filers. Then it falls again by 1 point per $2,000 single or $4,000 joint until it hits the 20% floor.
What counts as a care expense
The care must let you work or look for work. Both spouses need earned income if you file jointly, unless one is a full-time student or disabled. Qualifying costs include daycare centers, preschool, a nanny or babysitter, before and after school programs, and summer day camp. Overnight camp does not count. Neither does school tuition for kindergarten and up. The person receiving care must be your child under age 13, or a spouse or dependent who cannot care for themselves.
You claim it on Form 2441 with your care provider's name and tax ID. The credit is nonrefundable, so it can reduce your tax to zero but cannot create a refund on its own.
The dependent care FSA also got bigger
The same law raised the dependent care FSA limit from $5,000 to $7,500 starting in 2026. If your employer offers one, you can now set aside more pre-tax money for care. One catch: expenses paid through an FSA reduce the amounts you can count toward this credit. At higher incomes the FSA usually saves more than the credit, so run both numbers before open enrollment.
Frequently asked questions
How much is the child care tax credit for 2026?
Up to $1,500 for one child and $3,000 for two or more. That is 50% of the $3,000 or $6,000 expense caps. The 50% rate applies to lower incomes and steps down to 20% for higher earners. Nobody gets less than 20%, which is $600 for one child or $1,200 for two or more.
Is the child care credit different from the child tax credit?
Yes. The child tax credit is $2,200 per child under 17 regardless of care costs. The child and dependent care credit reimburses a share of what you spend on work-related care. You can claim both in the same year.
What is the income limit for the child care credit?
There is no income limit. Every income level qualifies for at least 20% of eligible expenses. The rate is higher at lower incomes, up to 50% for AGI under $15,000 single or $30,000 married filing jointly.
Does summer camp count for the dependent care credit?
Day camp counts. Overnight camp does not. The camp must let you work while your child under 13 attends.