Child care is one of the largest expenses American families face. With average costs ranging from $10,000 to $20,000 per child per year — and even more for infant care in expensive states — finding ways to reduce this burden can make a significant difference in your family's financial well-being.

The good news is that there are proven strategies that can save families thousands of dollars per year on child care. Some of these strategies involve tax-advantaged accounts. Others involve choosing different types of care or working with your employer. Many families can combine multiple strategies to maximize their savings. Here are ten proven ways to save money on child care in 2026. Use our Tax Savings Calculator to estimate how much the tax-related strategies could save your family.

1. Max Out Your Dependent Care FSA (DCAP)

The Dependent Care Flexible Spending Account (also called a DCAP or Dependent Care FSA) is arguably the single most effective tool for reducing child care costs. If your employer offers one, you can contribute up to $5,000 per year in pre-tax dollars to pay for qualified child care expenses. Here is why this is so powerful:

  • The $5,000 is deducted from your paycheck before federal income tax, Social Security tax, and Medicare tax are calculated.
  • For a family in the 22% federal tax bracket, the total tax savings on $5,000 is roughly $1,500–$2,000, depending on state taxes.
  • That is effectively a 30–40% discount on $5,000 of your child care expenses.

To use a DCAP, you enroll during your employer's open enrollment period (or within 30 days of a qualifying life event like a birth or adoption). You estimate your annual child care expenses and elect a contribution amount. Your employer deducts the amount from each paycheck and you submit claims for reimbursement as you pay for care. Some employers offer a debit card that automatically pays providers from your FSA balance. Use our Tax Savings Calculator to see exactly how much a DCAP would save your family.

2. Claim the Child and Dependent Care Credit

Even if you do not have access to a DCAP through your employer, you can still claim the Child and Dependent Care Credit on your federal tax return. This credit is worth 20–35% of up to $3,000 in qualifying expenses for one child or $6,000 for two or more children.

The credit phases down as your income increases, but even families earning well into six figures can claim the minimum 20% credit. That works out to $600 for one child or $1,200 for two or more children — a real, dollar-for-dollar reduction in your tax bill.

You can also combine a DCAP with the Child and Dependent Care Credit, though you must subtract DCAP contributions from qualifying expenses before calculating the credit. Our detailed Child and Dependent Care Credit Guide explains all the rules, and our Tax Savings Calculator can help you optimize the combination.

3. Check Your CCDF Subsidy Eligibility

The Child Care and Development Fund (CCDF) provides federal subsidies to help low- and moderate-income families pay for child care. Many families who qualify for subsidies do not apply because they assume they make too much money. In reality, income limits vary significantly by state and family size.

In 2026, thanks to the 2024 CCDF Final Rule, eligible families with incomes at or below 150% of the Federal Poverty Level pay no copayment — the subsidy covers the full cost of care. For all other eligible families, the copayment is capped at 7% of gross income.

Check your eligibility in seconds with our Subsidy Eligibility Calculator. For a complete understanding of the program, read our CCDF Subsidy Guide.

4. Choose a Family Child Care Home Instead of a Center

Family child care homes — licensed care provided in a caregiver's home — are typically 15–25% cheaper than center-based care. For a family paying $1,500 per month for center-based infant care, switching to a family child care home could save $225–$375 per month, or $2,700–$4,500 per year.

Family child care homes often offer other advantages: smaller group sizes, mixed-age groupings that can keep siblings together, more flexible hours, and a home-like environment. They are licensed and regulated, though typically subject to somewhat different (and often less stringent) rules than centers. Use our Monthly Child Care Cost Calculator to compare costs between center-based and family child care in your state.

5. Consider a Nanny Share

A nanny share — where two or more families share one nanny and split the cost — can dramatically reduce the cost of in-home care. Here is how the math works:

  • A solo nanny for one family: $25/hour x 40 hours/week = $1,000/week = $52,000/year (plus ~$4,500 in employer taxes)
  • A nanny share between two families: same $25/hour nanny, but each family pays $12.50/hour = $500/week = $26,000/year per family (plus ~$2,250 in employer taxes per family)

At $26,000 per year plus taxes, a nanny share can be cost-competitive with center-based care — especially for infants, where center costs are highest. And you get the flexibility, one-on-one attention, and convenience of a nanny. Use our Nanny vs Daycare Calculator to model a nanny share scenario and compare it with other options.

6. Form or Join a Child Care Co-op

A child care co-op is a group of parents who take turns caring for each other's children. In its simplest form, each parent provides care one day per week and receives care four days per week. No money changes hands — just time and trust. Co-ops are most practical for families with flexible schedules, part-time care needs, or a strong community network.

While co-ops are not a full substitute for full-time child care for most working families, they can significantly reduce the number of paid care days needed. Some co-ops operate out of a church or community center with hired staff supplemented by parent volunteers, which can reduce costs by 30–50% compared to a traditional center.

7. Take Advantage of Employer Benefits

Beyond the Dependent Care FSA, many employers offer additional child care benefits. It is worth reviewing your employee benefits package and asking your HR department specifically about:

  • Backup care benefits: Some employers subsidize or provide backup child care when your regular care falls through. Services like Bright Horizons Backup Care offer a certain number of backup care days per year at a reduced rate.
  • On-site child care: A small but growing number of employers offer on-site child care centers, often at a subsidized rate. Google, Patagonia, and many hospital systems are well-known examples.
  • Child care discounts: Some employers have negotiated discounted rates with national child care chains like KinderCare or Bright Horizons.
  • Child care subsidies: Certain employers offer direct child care subsidies or stipends, particularly for lower-paid employees. Some companies in the tech and financial sectors offer up to $10,000–$20,000 per year in child care assistance.
  • Dependent care spending accounts: In addition to the standard DCAP, some employers make additional contributions to employee FSAs or HSAs.

Even a modest employer contribution of $2,000–$5,000 per year can significantly offset child care costs. Ask your HR department about all available benefits — many go unclaimed simply because employees do not know about them.

8. Look Into Public Pre-K and Head Start Programs

Many states and localities offer free or low-cost pre-kindergarten programs for 3- and 4-year-olds. These programs are typically part-time (half-day or school-day) but can significantly reduce child care expenses during the preschool years. Some programs are universal (available to all children regardless of income), while others are income-qualified.

Head Start and Early Head Start provide free comprehensive early childhood education, health, and nutrition services to eligible low-income families. Head Start serves children ages 3–5, while Early Head Start serves pregnant women and children under age 3. Eligibility is based on income at or below 100% of the Federal Poverty Level, though up to 10% of slots can go to families above this threshold.

Even if a public pre-K program is only half-day, it can reduce your child care costs. For example, if your child attends a free half-day pre-K program, you may only need to pay for before- or after-school care rather than full-time care. Use our Monthly Child Care Cost Calculator to see how part-time care reduces costs in your state.

9. Adjust Work Schedules with Your Partner

If both parents work, consider whether you can stagger your work schedules to reduce the number of paid child care hours needed. For example:

  • Parent A works 7:00 AM to 3:00 PM. Parent B works 10:00 AM to 6:00 PM.
  • The children need paid care only from 7:00 AM to 10:00 AM (3 hours) and from 3:00 PM to 6:00 PM (3 hours).
  • Total paid care: 6 hours per day instead of 9–10 hours. This could reduce your child care costs by 30–40%.

This strategy works best for couples who have some schedule flexibility in their jobs. Remote or hybrid work arrangements can also reduce the need for full-time care. If one parent works from home, they may be able to manage with part-time care or a nanny who provides care while the parent works in another part of the home.

10. Use Tax Preparation Software That Handles Form 2441

This is a simple but often overlooked strategy: use tax preparation software that guides you through Form 2441 (Child and Dependent Care Expenses). Many families miss out on the Child and Dependent Care Credit because their tax software did not prompt them to claim it, or because they did not have their provider's Tax ID handy when filing.

Major tax software packages like TurboTax, H&R Block, and TaxSlayer all support Form 2441. They walk you through the questions and calculate the correct credit amount, including coordination with any DCAP contributions. The cost of the software is typically far less than the credit you will receive.

Alternatively, use our Tax Savings Calculator to estimate your credit in advance so you know what to expect when you file.

Putting It All Together: A Sample Savings Scenario

Let us see how these strategies can combine for a family with two children (infant and toddler) paying $2,500 per month ($30,000 per year) in center-based care:

  • DCAP contribution: $5,000 pre-tax saves ~$1,750 in combined federal and payroll taxes.
  • Child and Dependent Care Credit: After subtracting DCAP, $1,000 of qualifying expenses remain ($6,000 limit minus $5,000 DCAP) x 20% = $200 credit.
  • CCDF subsidy: If eligible, could save $500–$1,500 per month (check with our Subsidy Eligibility Calculator).
  • Switch to family child care home: If applicable, saves 15–25% = $375–$625 per month = $4,500–$7,500 per year.
  • Staggered schedules: Reduce paid hours by 20% = $500 per month = $6,000 per year.

Combined, this family could potentially reduce their effective child care costs from $30,000 per year to $10,000–$15,000 per year — a savings of 50–67%.

Start by using our Monthly Child Care Cost Calculator to estimate your baseline costs, then explore the Tax Savings Calculator and Subsidy Eligibility Calculator to maximize your savings. Every dollar saved on child care is a dollar you can put toward your family's other priorities.