The child and dependent care credit is a nonrefundable federal tax credit that reimburses you for a percentage of what you pay someone to care for a child, a disabled spouse, or another dependent while you work or look for work. For 2026, it covers 20 to 50 percent of up to $3,000 in care costs for one qualifying person or $6,000 for two or more. A law signed in July 2025 raised the top rate from 35 to 50 percent, so the maximum benefit is now $1,500 for one dependent or $3,000 for two or more.
How Much the Credit Is Worth
Two numbers set your credit: how much you spent on qualifying care (capped at $3,000 or $6,000), and what percentage of that spending you get back. The percentage is tied to your adjusted gross income.1Office of the Law Revision Counsel. 26 USC 21 – Expenses for Household and Dependent Care Services Necessary for Gainful Employment
The 50 percent top rate applies only at the very bottom of the income range, at AGI of $15,000 or below. From there the rate slides down until it reaches 35 percent at an AGI just above $43,000. Most working families sit in the wide band where the rate stays flat at 35 percent: it holds there up to $75,000 of AGI for single or head-of-household filers, and up to $150,000 for joint filers. Above those thresholds the rate resumes its descent, one percentage point at a time, and lands at a 20 percent floor for the highest earners.1Office of the Law Revision Counsel. 26 USC 21 – Expenses for Household and Dependent Care Services Necessary for Gainful Employment
A worked example: a married couple filing jointly earns $80,000 and pays $12,000 a year for full-time daycare for two children. Their expenses are capped at $6,000. Their income puts them in the 35 percent band, so the credit is $2,100.2Internal Revenue Service. Publication 503 – Child and Dependent Care Expenses
One important limit: the credit is nonrefundable. It can wipe out your tax bill but cannot generate a refund by itself, and any unused portion does not carry forward to next year.3Internal Revenue Service. Tax Credits for Individuals: What They Mean and How They Can Help Refunds
Who Counts as a Qualifying Person
Care costs only count when they were paid for someone in one of three categories:1Office of the Law Revision Counsel. 26 USC 21 – Expenses for Household and Dependent Care Services Necessary for Gainful Employment
- A child under age 13 whom you claim as a dependent.
- A dependent of any age who is physically or mentally unable to care for themselves.
- Your spouse, if physically or mentally unable to self-care.
The qualifying person must share your main home for more than half the tax year. Temporary absences for school, medical treatment, or vacation don’t count against that.
Divorced or Separated Parents
The custodial parent claims the credit, and the IRS defines the custodial parent as the one the child spent the greater number of nights with during the year.2Internal Revenue Service. Publication 503 – Child and Dependent Care Expenses This works differently from the dependency exemption. Even when the noncustodial parent has the right to claim the child as a dependent (through Form 8332), the custodial parent still claims the care credit.4Internal Revenue Service. Topic No. 602, Child and Dependent Care Credit
Do You Qualify as the Taxpayer
You need earned income during the year: wages, salary, tips, or net self-employment earnings. If you’re married, both spouses need earned income, and the credit is capped at the earnings of whichever spouse earned less.2Internal Revenue Service. Publication 503 – Child and Dependent Care Expenses The care itself must be work-related, meaning you paid for it so you could hold a job or actively search for one.
There’s a workaround if one spouse is a full-time student or is physically unable to provide self-care. That spouse is treated as earning $250 a month with one qualifying person in the home, or $500 a month with two or more. Without this rule a student household could not claim the credit at all.
Married couples must file jointly. The only exception: if you’re legally separated, or you lived apart from your spouse for the last six months of the year, the IRS treats you as unmarried for this purpose and you can file separately.
Which Expenses Qualify
Care paid to a daycare center, nursery school, or preschool counts, as long as the provider complies with state and local rules. Summer day camps qualify, including specialty camps organized around a sport or activity. Overnight camps do not.2Internal Revenue Service. Publication 503 – Child and Dependent Care Expenses
Once your child starts kindergarten, tuition itself stops being a care expense. But before-school and after-school programs for kindergarten-age and older children still qualify, which is easy to miss.5Internal Revenue Service. Child and Dependent Care Credit and Flexible Benefit Plans
Payments to a nanny, housekeeper, or cook who lives or works in your home count if part of the job is caring for a qualifying person. Non-care household duties like cleaning or cooking are fine as long as they stay minor compared with the care work.
People You Cannot Pay
Some caregivers are automatically disqualified no matter how much you paid them:4Internal Revenue Service. Topic No. 602, Child and Dependent Care Credit
- Your spouse.
- The parent of the qualifying child, if that child is under 13.
- Your own child under age 19, whether or not you claim them as a dependent.
- Anyone you or your spouse claims as a dependent.
Other relatives are allowed. You can pay a grandparent, an adult sibling, or an aunt or uncle and count the cost, provided that person is not your dependent.
How the Credit Works With a Dependent Care FSA
If your employer offers a dependent care flexible spending account, you can set aside pretax dollars to pay for the same care. For 2026, the annual contribution limit is $7,500 for joint filers and single or head-of-household filers, or $3,750 if married filing separately.6FSAFEDS. Dependent Care FSA The prior cap was $5,000, so 2026 is a big jump.
The same dollar of care cannot get both breaks. You subtract employer-provided dependent care benefits from your eligible expenses before figuring the credit. Because the credit’s expense cap is only $3,000 or $6,000, a fully funded FSA often absorbs everything you could have claimed. The households most likely to benefit from both are those with two or more children and total care costs well above $7,500, where money remains to run through the credit after the FSA is exhausted.
How to Claim It
You claim the credit by filing Form 2441 with your Form 1040 or 1040-SR. Tax software handles the arithmetic, but you’ll need to gather two things beforehand.
First, provider information. For each person or business you paid, you need a name, address, and taxpayer identification number: a Social Security number for an individual caregiver, an Employer Identification Number for a daycare center or other business. Form W-10 is the IRS request form, though any written request is acceptable.7Internal Revenue Service. About Form W-10, Dependent Care Provider’s Identification and Certification If a provider refuses to give you the number, you can still claim the credit by attaching a statement to your return explaining that you asked and the provider declined.8Internal Revenue Service. Child and Dependent Care Credit and Flexible Benefit Plans
Second, records showing what you paid. Receipts, bank statements, or canceled checks are enough. Report your out-of-pocket cost only, after subtracting any FSA or other employer dependent care benefits. The credit ends up on the nonrefundable credits line of Form 1040 and reduces your tax dollar for dollar; anything over your tax bill is lost.