8 Tips for Lowering Childcare Costs, From Experts

When my third daughter was born, I already had a 4-year-old and a 3-year-old at home. Running the numbers on full-time daycare for three kids was genuinely shocking. The total came out to nearly as much as my entire salary. At that point, the math made the decision for me: I left my full-time job and shifted to freelance work.

I’m far from alone in feeling the squeeze. According to the Care.com 2026 Cost of Care Report, the average parent now spends 20 percent or more of their annual household income on childcare, and 31 percent are dipping into their savings to cover the gap. That’s nearly triple the 7 percent benchmark that the U.S. Department of Health and Human Services (HHS) considers affordable.

If you’re staring down a childcare bill that feels impossible, know that there are real, practical strategies that can bring the cost down. Experts say that with a few smart financial moves and some creative thinking, you can make this major expense feel a little less daunting. Read on for their tips—plus, advice from real parents who’ve faced the pricey pinch.

Key Takeaways

• The average American family spends 20 percent or more of household income on childcare.
• Tax-advantaged accounts like Dependent Care FSAs and the Child and Dependent Care Tax Credit can meaningfully reduce your out-of-pocket costs.
• For families with multiple young children, a nanny share or au pair can sometimes be more affordable than paying separate daycare tuition for each child.
• Reassessing your childcare setup annually, not just when your children are babies, can unlock significant savings as your needs evolve.

What Qualifies as Childcare Expenses?

Before you start looking for ways to save, it helps to know what the IRS considers a qualified childcare expense when it comes to tax benefits like the Child and Dependent Care Tax Credit (CDCTC) and Dependent Care Flexible Spending Accounts (DCFSAs).

Qualifying expenses generally include:

• Licensed daycare centers and family daycare homes
• After-school care programs
• Babysitters, nannies and au pairs (when providing care while you work or look for work)
• Day camps (but not overnight camps)
• Pre-K programs

The key requirement: The care must be provided so that you (and your spouse, if married) can work or actively look for work. The child must generally be under 13, (this age varies depending on some disabilities that prevent them from caring for themselves).

What Doesn’t Qualify as Childcare Expenses?

Not all care-related spending counts when it comes to tax savings. The following generally don’t qualify:

• Overnight camps
• Tutoring or educational programs (as opposed to care programs)
• Payments made to your spouse or the child’s parent
• Payments to your own child under age 19
• Kindergarten tuition (it’s considered education, not care)
• Clothing, food or other indirect costs

When in doubt, check with a tax professional, especially if you’re trying to coordinate a Dependent Care FSA with the CDCTC, since there are rules about which expenses you can claim under each.

How Much Does Childcare Cost Around the US?

Childcare costs vary dramatically depending on where you live. Nationally, the average cost of full-time infant center-based care is approximately $1,230 per month, or about $14,760 per year, according to 2026 data. But that average masks a massive range.

Most expensive states for childcare

• Washington, DC: $2,400/month ($28,800/year)
• Massachusetts: $2,200/month ($26,400/year)
• New York: $1,900/month ($22,800/year)
• California: $1,800/month ($21,600/year)
• Washington: $1,750/month ($21,000/year)

Most affordable states for childcare

• Mississippi: $650/month ($7,800/year)
• Alabama: $700/month ($8,400/year)
• Tennessee: $800/month ($9,600/year)

For context: In 28 states, the annual cost of childcare for one baby is higher than the cost of in-state college tuition for one year. In Washington, DC, that $28,000-plus annual cost is roughly equal to a year’s rent on a one-bedroom apartment.

Tips to Lower the Cost of Childcare

While the reality is that childcare can be prohibitively expensive, following these practical tips might just help your bottom line.

1. Reassess your childcare setup every single year

“Take a fresh look at your childcare needs every single year, rather than assume the arrangement you chose when your child was an infant is still the best fit,” advises Heather Boneparth, the director of business affairs for Bone Fide Wealth in New York City and co-author of Money Together. “Life changes, and your needs do too.”

Aftercare is a great example, says Boneparth: As your child gets older and gains independence, you may not need five days a week of after-school care anymore. “Maybe you can replace five days a week of aftercare with a mix of carpools to after-school activities, rotating playdates and part-time afternoon babysitter shares,” she advises. “If your partner also has flexibility, you can strategically plan your workweeks to take turns accommodating pickups.”

2. Max out your Dependent Care FSA first

Using pre-tax dollars to pay for childcare is one of the most straightforward ways to lower your bill. In 2026, eligible employees can contribute up to $7,500 to a Dependent Care Flexible Spending Account (DCFSA).

Depending on your childcare costs and tax situation, you could also benefit from the Child and Dependent Care Tax Credit. “It’s worth talking with your tax professional about how these benefits interact so you can maximize your family’s tax savings,” notes Boneparth.

To put the savings in concrete terms: If you’re in the 22 percent federal tax bracket, contributing $5,000 to a DCFSA reduces your tax bill by $1,100. Maxing out at $7,500 saves you even more. This is money that goes directly back in your pocket without changing anything about your childcare arrangement.

3. Check your employee benefits package

“Many employers offer backup and emergency childcare benefits that go unused because employees just don’t know they exist,” says Boneparth. “Take the time to review your employee benefits package each year. You might be surprised by what you find.”

Some employers offer childcare subsidies, backup childcare days or partnerships with local centers that provide discounted rates. Others have started offering childcare stipends as a recruitment and retention benefit. According to the 2026 Care.com report, 93 percent of parents believe employers should help ease the childcare burden—but many don’t realize their own company already has something in place. “My company offers 10 backup childcare days per year and I had no idea until a coworker mentioned it during lunch. That’s money I’d been leaving on the table for three years,” says Christina T., a mom of two in Chicago.

4. Consider a nanny share or au pair

If you’re paying for two or more kids in daycare, it may make more sense to hire an at-home caregiver. “For families with multiple young children, the math may not math, because multiple tuitions may end up costing more than paying one caregiver a higher rate,” says Boneparth.

A nanny share, where two families split the cost of one caregiver, can bring the per-family cost to roughly what you’d pay for a single daycare enrollment while providing in-home, individualized care.

An au pair, typically a young person from abroad living with your family in exchange for childcare, is another option that can run $1,500 to $2,000 per month all-in, once you factor in room, board, a small stipend and program fees.

“In most cases, a nanny is the more expensive option, particularly once you factor in payroll taxes, paid time off and other employment-related costs,” Boneparth notes. “But for families with multiple young children, the right choice depends on your family’s priorities and needs.”

5. Look into a gym membership with childcare

A gym can be a surprisingly inexpensive option for childcare—if you know where to look. Catherine Collins, a financial expert, writer and founder of Mom’s Got Money, found this strategy to be a helpful, creative workaround when her twins were young. “Get a membership to a fancy gym that has amazing childcare,” Collins advises. “Some people scoff at the idea of spending $200 per month for a gym membership, but the math [makes sense].”

Collins took her twins to the gym almost every day for five years, dropping them off in the childcare room while she worked on her laptop, sipped free coffee or simply enjoyed a long, uninterrupted shower. “Let’s say conservatively I only used that gym for 20 days a month for two-and-a-half hours per day. That’s 50 hours of childcare per month for only $200. That means I paid $4 per hour for childcare for twins.”

It’s not a replacement for full-day coverage, but as supplemental care that also supports your own health and sanity, it’s hard to beat the value.

6. Explore state subsidy programs before you assume you don’t qualify

The Child Care and Development Fund (CCDF) is the primary federal vehicle for childcare subsidies, administered at the state level. Eligibility varies, but most programs target families earning up to 85 percent of the state median income. The catch: Only about one in seven eligible families actually receives this assistance, often because parents don’t know to apply or assume they won’t qualify.

Contact your state’s childcare resource and referral agency early, often months before you actually need care. Many subsidy programs have waitlists, and applying late can mean missing out on help you would’ve received.

“I assumed we made too much to qualify for any help,” says Priya K., a mom of one in Denver. “When I finally called our state’s agency, I found out we were well within the income limit. We’d been overpaying for over a year.”

7. Ask about sibling discounts and flexible scheduling options

Many daycare centers and family childcare homes offer sibling discounts—but they may not advertise them upfront. According to national average data from Care.com, a typical sibling discount runs around 10 percent, which can add up significantly for families with two or more kids at the same center.

Beyond discounts, some centers offer three-day-per-week enrollment at roughly 60 to 70 percent of the full-time rate. If your schedule or your child’s needs have some wiggle room, part-time enrollment paired with a grandparent day, a babysitter share or a work-from-home day can help stretch your childcare bucks.

“We moved our son to a three-day schedule when I got a remote work arrangement,” says Jon P., a dad of two in Austin. “We saved almost $400 a month just by having him home on Tuesdays and Thursdays.”

8. Do your financial planning before baby arrives

“Our firm encourages clients to remove as many financial surprises as possible before baby arrives,” says Boneparth. This means doing the research on baby costs in your area, modeling out how childcare expenses will affect your monthly cash flow and making proactive choices before emotions are running high and sleep deprivation kicks in.

“If your budget can’t accommodate those monthly costs, you want to be able to make proactive choices ahead of time rather than have your backs against the wall,” Boneparth adds. That might mean building up your emergency fund, understanding your employer’s parental benefits or investigating subsidy eligibility.

To Sum It Up

Childcare costs are high, and for many families, they feel impossible. It takes some due diligence—but there are meaningful ways to reduce the burden, from maxing out your Dependent Care FSA and negotiating sibling discounts to reassessing the situation as your kids grow and getting creative with gym memberships (hey, a workout and daycare in one is a pretty good deal).

How We Developed This Article

No sugar coating it: Childcare costs are astronomical. To help parents save money on these bills, we spoke with two financial experts. We also consulted 2026 childcare cost data from the Care.com 2026 Cost of Care Report, state-by-state pricing data from the Administration for Children and Families (ACF) and third-party cost calculators. Finally, we spoke with real parents about their childcare cost experiences.

After editing, this article was vetted through fact-check. Learn more about how we ensure the accuracy of our content through our editorial and medical review process.

About the author: Sarah Brooks is a financial writer and editor with more than a decade of experience creating personal finance content for leading publications and brands, including SoFi, LendingTree, FinanceBuzz and GOBankingRates. She specializes in making complex financial topics easy to understand, helping readers make smarter decisions about saving, investing, borrowing and retirement planning. Having been faced with daycare bills for her three daughters, she also has personal experience dealing with childcare costs. Sarah holds a B.S. in Finance from Arizona State University and lives in Tennessee.