Childcare Tax Savings Calculator (2026)
That $1,200/month daycare bill isn't really $1,200/month. After the federal credit, state credits, and FSA savings, most families pay 15–30% less. Enter your numbers below.
2026 Enhanced Rates: One Big Beautiful Bill Act
The One Big Beautiful Bill Act proposes to increase the maximum Child and Dependent Care Credit rate from 35% to 50% for 2026. This calculator uses the proposed enhanced rates. Current law still applies the 20–35% table until the bill passes. Check IRS.gov for the latest status.
Your Situation
Married Filing Separately — Credit Not Available
The IRS disallows the Child and Dependent Care Credit for MFS filers (with a narrow exception if you lived apart from your spouse for the last 6 months of the year). Most MFS filers cannot claim this credit.
For MFJ, enter your combined household AGI.
Available through many employers. Saves $1,250–$1,900/year depending on your tax bracket.
FSA savings include income tax + FICA (7.65%) savings on $5,000 pre-tax contribution.
No Federal Credit for Married Filing Separately
MFS filers cannot claim the Child and Dependent Care Credit under standard circumstances. If you lived apart from your spouse for the last 6 months of the tax year, you may qualify to file as Head of Household instead — which restores eligibility. Consult a tax professional for your specific situation.
You may still benefit from a Dependent Care FSA through your employer, which reduces taxable income regardless of filing status.
How the Three Savings Levers Work
The Dependent Care FSA saves $600–$1,500/year by paying childcare with pre-tax dollars (up to $5,000). The Child and Dependent Care Tax Credit saves $600–$1,050 on top. Employer-provided care benefits are tax-free up to $5,000. Stacking all three can reduce a $15,000/year childcare bill by $2,200–$3,500 depending on your income bracket and tax situation.
20–50% of qualifying expenses under proposed OBBA rates (current law: 20–35%). Expense cap: $3,000 for one child, $6,000 for two or more. Non-refundable — reduces your tax bill but won't generate a refund. Cannot be claimed if you file Married Filing Separately. Rates above 35% are proposed and not yet enacted.
About 25 states layer their own credit on top of the federal one. Minnesota, New Mexico, and Oregon have the most generous programs. Some state credits are fully refundable — meaning you get the money back even if you owe no state income tax.
Contribute up to $5,000 pre-tax through your employer ($5,000 household limit for MFJ filers). Saves on federal income tax, state income tax, AND Social Security/Medicare taxes (7.65%). Use it before the tax credit — it reduces the credit base, but saves more per dollar overall.
Credit by Filing Status
How your filing status affects what you can claim.
Top State Credits (2026)
States with the highest additional credits on top of the federal baseline (proposed OBBA max: $1,500 for 1 child, $3,000 for 2+).
Daycare Costs in Your State
The gross cost that feeds this calculator. See what families actually pay.
Common Questions
FSA vs. tax credit — which saves more?
Under current law (20–35% rates), the FSA usually saves more per dollar. A $5,000 FSA at 22% bracket saves $1,383 vs. a $600 federal credit for one child. Under the proposed OBBA 50% rate (lower-income families), the math shifts — a 50% credit on $3,000 saves $1,500, compared to the FSA's $1,383. For most middle-income families the FSA still wins, but with 2+ kids the credit on the remaining $1,000 after FSA becomes $200 (current law) or up to $500 (proposed 50%).
Can both spouses contribute to separate FSAs?
If both employers offer Dependent Care FSAs, both spouses can contribute — but the household total cannot exceed $5,000. You can split it any way ($2,500 each, $3,000/$2,000, etc.), but going over $5,000 combined creates a tax penalty. The limit applies per household, not per person.
I'm self-employed. Do I qualify?
Yes for the federal credit — self-employed parents qualify as long as you're working. FSAs are only available through employer benefit plans, so solo self-employed people typically can't use one. If you have an S-corp or employ your spouse, some structures allow dependent care FSA contributions. Worth checking with a tax pro if you're running significant childcare expenses.