The Child and Dependent Care Credit offsets what you pay someone else to care for a child or a dependent who cannot care for themselves, so that you can work or look for work. The One Big Beautiful Bill Act raised the top credit percentage starting with the 2026 tax year, which makes this credit worth more than it has been in years past for lower and middle income families.<\/p>\n\n\n\n
Childcare expenses can add up quickly, and for many working people can comprise a significant percentage of their income. For this reason, to ease the financial burden of those who must contend with these costs, the federal government instituted the child and dependent care tax credit. This credit helps offset the expenses of childcare or dependent care by reducing a parent’s or caregiver’s tax burden by hundreds or even thousands of dollars.<\/p>\n\n\n\n
Unlike a tax deduction, which reduces the amount of income upon which taxes are owed, a tax credit reduces taxes that are owed dollar for dollar, and does so regardless of income level. (Many tax breaks come with specified income ceilings which render ineligible those who are more financially well-off.) Though the child and dependent care credit does decrease as income increases, it is never negated entirely for even the wealthiest of individuals.<\/p>\n\n\n\n
To qualify for the child and dependent care credit, an individual must be able to document care expenses for one or more of the following people:<\/p>\n\n\n\n
A child you claim as a dependent who was under age 13 when the care was provided.<\/p>\n\n\n\n
A spouse who is incapable of caring for himself\/herself and who resides with you for at least half the year.<\/p>\n\n\n\n
Any person you claim as a dependent who is incapable of caring for himself\/herself and who resides with you for at least half the year.<\/p>\n\n\n\n
Qualified expenses cover care itself. Amounts paid for food, lodging, clothing, education, and entertainment do not count.<\/p>\n\n\n\n
There are certain care conditions, however, to which the credit does not apply. Even if you’ve compensated the following people for care, you will not be able to claim the credit:<\/p>\n\n\n\n
Your spouse, at any point during the year<\/p>\n\n\n\n
The parent of your qualifying person, if that person is your child and under age 13. Paying an ex-spouse to care for children you share does not qualify.<\/p>\n\n\n\n
Anyone else you claim as a dependent on your tax return<\/p>\n\n\n\n
A child of yours who was under age 19 at the end of the year, whether or not you claim them as a dependent. Paying your 17 year old to watch a younger sibling does not qualify.<\/p>\n\n\n\n
The credit is a percentage of your qualified care expenses, and both the expenses and the percentage are capped. You can count up to $3,000 in expenses for one qualifying person, or $6,000 for two or more.<\/p>\n\n\n\n
For the 2025 tax year, the percentage ranged from 20% to 35% depending on income. Beginning with the 2026 tax year, the One Big Beautiful Bill Act raised the top percentage to 50%. Lower income households now claim a larger share of their care costs, while the percentage still steps down as income rises. There is no upper income limit that disqualifies you entirely.<\/p>\n\n\n\n
Your allowable expenses are the smallest of three figures: what you actually spent on qualifying care, your earned income, and your spouse’s earned income if you are married. The credit is calculated on that number.<\/p>\n\n\n\n
Employer-provided childcare benefits reduce what you can claim. If you contribute to a dependent care flexible spending account, subtract that amount from your care expenses before calculating the credit. The FSA contribution limit is $7,500, and contributing the maximum generally leaves nothing left to claim against the credit.<\/p>\n\n\n\n
Additionally, to claim the credit, you (and your spouse, if you’re married) must file as single, head of household, qualifying surviving spouse, or married filing jointly. If you are legally separated or living apart from your spouse, IRS Publication 503 explains when you may be considered unmarried for purposes of this credit. You must also identify the care provider on your return, including their name, address and Social Security Number (SSN) or Employer Identification Number (EIN). You must also be able to document “earned income,” which refers to money that has been earned through some form of compensated work rather than income from investments, an inheritance, or other non-job-related sources.<\/p>\n\n\n\n
Further, the care must have been obtained and compensated for the purpose of you being able to work or to actively search for work, though for IRS’ purposes a parent or a caregiver who is a full-time student, even if they’re not receiving any income, is regarded as “working” and may therefore be eligible for the credit.<\/p>\n\n\n\n
The credit is claimed on Form 2441, Child and Dependent Care Expenses, which attaches to your Form 1040, 1040-SR, or 1040-NR.<\/p>\n\n\n\n
These are two different credits and families regularly mix them up. The Child Tax Credit is based on having a qualifying child under 17 and is worth up to $2,200 per child for 2026, with up to $1,700 refundable. It does not matter what you spent. The Child and Dependent Care Credit is based entirely on what you paid someone else for care so you could work, and it is not refundable.<\/p>\n\n\n\n
They use different forms. The Child Tax Credit runs through Schedule 8812, and this credit runs through Form 2441. You can claim both in the same year if you qualify for both, and many families do.<\/p>\n\n\n\n
When it comes time to file your taxes and claim your credit, our software will help walk you through the steps to figure out the amount of your tax credit. Our goal is to try and make what might initially feel like a complicated process simple and error-free.<\/p>\n\n\n\n
Note: Tax laws may change with little notice. We do our best to keep this information current, but it is provided on an \u201cAS IS\u201d basis. It should not be considered, legal, financial, or other professional guidance. For more, see our terms.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Child and Dependent Care Credit can help offset care expenses paid for a child or dependent so you can work or look for work. Learn how much you can claim, what expenses count, and how to file using Form 2441.<\/p>\n