How much does daycare cost on average in the U.S.?

The national average for full-time infant centre-based daycare is approximately $1,230 per month ($14,760 per year), but costs vary enormously by state. Massachusetts and Washington D.C. average over $2,000/month for infants, while Mississippi averages under $500/month. Urban areas within any state tend to run 20–30% higher than the statewide average.

What is a Dependent Care FSA (DCFSA) and how does it save money?

A Dependent Care FSA (also called a DCAP or childcare FSA) lets you set aside up to $5,000 per year in pre-tax dollars to pay for eligible childcare expenses. Because the money avoids federal income tax and Social Security/Medicare taxes, a family in the 22% federal bracket saves approximately $1,100 per year — or roughly one month of daycare. The limit applies per household (not per child). You must enrol during open enrolment or when your child is born.

Is a nanny more expensive than daycare?

Yes — a full-time nanny typically costs 1.5–2.5× more than a daycare centre. However, for families with two or more young children, a nanny can become cost-competitive because daycare charges per-child. A nanny for two children may cost similar to (or less than) two daycare slots. Nanny costs also include employer taxes — approximately 10% on top of the gross wage — which many families overlook when budgeting.

Does the cost of daycare vary by child's age?

Yes, significantly. Infant care is the most expensive because state regulations require lower child-to-staff ratios (typically 1:3 or 1:4 for infants, versus 1:10 for preschoolers). As a result, infant care can cost 20–40% more than preschool-age care at the same centre. This is one reason many families use parental leave, nanny shares, or family care for the first year before transitioning to a centre at age 1–2.

What is a family daycare home and how does it compare to a centre?

A family daycare home (also called a family childcare home) is a licensed provider who cares for a small group of children — typically 6 or fewer — in their own home. Costs are generally 20–30% lower than centre-based care. The trade-off is less structured programming, smaller peer groups, and the fact that if the provider is sick or takes a day off, you may need a backup plan. Look for providers licensed by your state, which indicates regular health and safety inspections.

What is the Child and Dependent Care Tax Credit (CDCTC)?

The CDCTC is a federal tax credit (not a deduction) of 20–35% on up to $3,000 of childcare expenses for one child, or $6,000 for two or more children. However, if you use a DCFSA, you must reduce the eligible expenses for the credit by your FSA contribution. For most middle-income families, maxing out the DCFSA first and then claiming the credit on remaining expenses is the most advantageous strategy — but your personal situation varies. Consult a tax professional for advice specific to your household.

How can I reduce my childcare costs?

The most impactful strategies are: (1) Use a Dependent Care FSA if your employer offers one — this alone saves most families $500–$1,500/year. (2) Apply for subsidy programmes — the federal Child Care and Development Fund (CCDF) provides subsidies to eligible low- and moderate-income families through your state; eligibility and waitlists vary. (3) Consider a nanny share — two families share one nanny, each paying roughly 60–65% of a solo nanny cost. (4) Explore employer childcare benefits — some larger employers offer subsidised backup care or partnerships with local centres.

Childcare Cost Calculator

Estimate daycare, nanny, and family home costs by state — and see how much a Dependent Care FSA could save you.

Your state

Type of care

Child's age group

Number of children needing care

Household income bracket (for DCFSA savings estimate)

Under $50,000(12% federal marginal rate)

$50,000 – $100,000(22% federal marginal rate)

$100,000 – $200,000(24% federal marginal rate)

$200,000 – $400,000(32% federal marginal rate)

Over $400,000(37% federal marginal rate (DCFSA less advantageous at this level))

Understanding Childcare Costs in the U.S.

Childcare is often the single largest line item in a family's budget — frequently exceeding rent or a mortgage payment. According to the Economic Policy Institute, full-time infant care costs more than in-state college tuition in 33 U.S. states. Understanding where your costs fall relative to your state and care type helps you plan, compare options, and find savings.

Why infant care costs so much. State licensing regulations require low child-to-staff ratios for infants (typically 1:3 or 1:4). That means a single provider can only care for 3–4 babies, making infant rooms labour-intensive to run. Preschool rooms, by contrast, may have 1:10 ratios — the same staff salary spread over more children brings the per-child cost down significantly.

The DCFSA is one of the most underused benefits in America. Approximately 40% of eligible employees don't enrol in a Dependent Care FSA. At a 22% tax bracket, every dollar you put into a DCFSA saves 22 cents — that's like a guaranteed 22% return on up to $5,000, with no risk. If your employer offers it, enrolment during your child's first weeks of life (a qualifying life event) is one of the highest-leverage financial moves you can make as a new parent.

Subsidies exist but are hard to find. The federal Child Care and Development Fund (CCDF) distributes billions annually to states to subsidise childcare for qualifying families. Income eligibility varies by state, but many moderate-income families qualify. Contact your state's childcare resource and referral agency to find out — search "childcare subsidy [your state]" to start.

Childcare Cost Calculator — Frequently Asked Questions

Sources & Methodology

Child Care Aware of America — Research

Last reviewed: October 17, 2026

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Understanding Childcare Costs in the U.S.

Childcare Cost Calculator — Frequently Asked Questions

Sources & Methodology

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