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Tennessee families paying $850/month for daycare can save $1,850-$3,400/year through the federal CDCTC and a Dependent Care FSA. Tennessee has no state income tax, so there is no state-level credit, but your take-home pay is already higher than in most states.

Tennessee Childcare Tax Credit & Savings Calculator (2026)

Full-time daycare in Tennessee averages $850/month ($10,200/year). Here's what you can claim back.

Avg. Daycare Cost

$850/mo

Tennessee, center-based infant care

Federal Credit (CDCTC)

up to $3,000

20-50% of $6K max (proposed 2026)

Tennessee State Credit

No state tax

No income tax = no state credit

Calculate Your Exact Savings

Enter your income, filing status, and number of kids to see your net daycare cost after all credits and FSA savings.

Open Tax Calculator

Tennessee Childcare Tax Credit Details (2026)

Tennessee has no state income tax, so there's no state-level childcare tax credit. You still qualify for the federal Child and Dependent Care Credit (CDCTC) and Dependent Care FSA through your employer.

The good news: no state income tax means your take-home pay is already higher. A family earning $80K in Tennessee keeps roughly $2,000-$5,000 more annually than the same family in a state with 5-7% income tax.

Example Savings for a Tennessee Family

1 child, married filing jointly, $10,200/year in daycare. Proposed 2026 OBBA rates.

Income (AGI)	Federal	FSA	Total
$30K	$1,290	$983	$2,273
$50K	$990	$983	$1,973
$75K	$600	$1,483	$2,083
$100K	$600	$1,483	$2,083

Federal rates: proposed OBBA 2026 schedule (50% max). FSA: $5,000 pre-tax, savings include FICA 7.65%. State credit calculations are approximate.

Questions About Tennessee Childcare Tax Benefits

Does Tennessee have a childcare tax credit?

Tennessee has no state income tax, so there is no state-level childcare tax credit. You still qualify for the federal CDCTC (up to $3,000 proposed for 2026) and a Dependent Care FSA through your employer ($1,250-$1,900/year savings).

How much does daycare cost in Tennessee?

Full-time infant center-based care in Tennessee averages $850/month ($10,200/year). Costs vary by city. See our Tennessee daycare cost page for city-level rates.

Can I claim both the federal credit and a Dependent Care FSA?

Yes, but they share an expense pool. If you put $5,000 in your FSA, the max qualifying expenses for the federal credit drops from $3,000/$6,000 to $0/$1,000. In most cases, the FSA saves more per dollar (income tax + FICA savings), so use it first.

More for Tennessee Parents

Tennessee Daycare Costs

City-by-city rates

Tennessee Subsidy Eligibility

CCDF income limits

Interactive Tax Calculator

See your exact savings

Affordability Calculator

% of income going to childcare

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