What the credit is
The child and dependent care credit, claimed on Form 2441, returns a percentage of the expenses you pay for the care of a qualifying person so that you, and your spouse on a joint return, can work or look for work. IRS Topic 602 caps the expenses at $3,000 for one qualifying person and $6,000 for two or more, and for 2026 the IRS puts the percentage between 20 and 50 percent, so the credit is at most $1,500 or $3,000. It is nonrefundable: it reduces income tax owed and nothing beyond that is refunded.
The 2026 percentage by income
The IRS describes the 2026 schedule in words: 50 percent at adjusted gross income of $15,000 or less, gradually decreasing to 35 percent as income rises, decreasing again once income exceeds $75,000, or $150,000 married filing jointly, and never below 20 percent. The draft 2026 Form 2441 instructions carry the table, and the Congressional Research Service spells out the step: one percentage point for each $2,000, or part of one, by which AGI exceeds $15,000, until 35 percent; then one point for each $2,000 ($4,000 joint) above the second threshold, until 20 percent.
| Adjusted gross income | Rate, single or head of household | Rate, married filing jointly | Max credit, one person (single / joint) | Max credit, two or more (single / joint) |
|---|---|---|---|---|
| $15,000 | 50% | 50% | $1,500 / $1,500 | $3,000 / $3,000 |
| $25,000 | 45% | 45% | $1,350 / $1,350 | $2,700 / $2,700 |
| $35,000 | 40% | 40% | $1,200 / $1,200 | $2,400 / $2,400 |
| $43,000 | 36% | 36% | $1,080 / $1,080 | $2,160 / $2,160 |
| $60,000 | 35% | 35% | $1,050 / $1,050 | $2,100 / $2,100 |
| $75,000 | 35% | 35% | $1,050 / $1,050 | $2,100 / $2,100 |
| $85,000 | 30% | 35% | $900 / $1,050 | $1,800 / $2,100 |
| $103,000 | 21% | 35% | $630 / $1,050 | $1,260 / $2,100 |
| $150,000 | 20% | 35% | $600 / $1,050 | $1,200 / $2,100 |
| $180,000 | 20% | 27% | $600 / $810 | $1,200 / $1,620 |
| $206,000 | 20% | 21% | $600 / $630 | $1,200 / $1,260 |
The first phase-down uses the same $15,000 start for every filing status, so once AGI exceeds $43,000 everyone is at 35 percent. The 35 percent plateau then runs to $75,000 for single filers and heads of household and to $150,000 for joint filers, and the second phase-down reaches the 20 percent floor once AGI exceeds $103,000 single or $206,000 joint. Above that the credit is a flat 20 percent, with no upper income limit.
The tests
- Qualifying person: your dependent qualifying child under age 13 when the care was provided; a spouse incapable of self-care who lived with you more than half the year; or a dependent incapable of self-care who lived with you more than half the year.
- Work-related: the care must enable you, and your spouse if filing jointly, to work or actively look for work. Summer day camp counts under Publication 503; overnight camp and schooling from kindergarten up do not.
- Earned income: the expenses claimed may not exceed the smaller of your earned income or your spouse's. A spouse who is a full-time student or incapable of self-care is treated as earning $250 a month, $500 with two or more qualifying persons.
- Provider identification: you must report each provider's name, address and taxpayer identification number on Form 2441; Form W-10 is the request form, and a tax-exempt organisation needs only name and address.
- Filing status: married couples generally must file jointly; the EITC rules for separated spouses have a counterpart here.
Two families
| A: single parent, one child | B: couple, two children | |
|---|---|---|
| Adjusted gross income | $30,000 | $60,000 |
| Care expenses paid | $4,000 | $9,000 |
| Expense limit | $3,000 | $6,000 |
| Rate for 2026 | 42% | 35% |
| Credit | $1,260 | $2,100 |
| Same family in 2025 (35% top rate) | $810 at 27% | $1,200 at 20% |
Family A's rate is 42% because $30,000 is $15,000 over the $15,000 start, eight steps of $2,000 down from 50. Family B sits on the 35 percent plateau. In both cases the credit is limited to the family's income tax, which the paycheck calculator estimates from the yearly wages; the budget planner is where the care bill itself lives.
The dependent care FSA interaction
Employer dependent care benefits that you exclude from income, which is what a dependent care flexible spending account is, are subtracted from the $3,000 or $6,000 limit before the credit is figured. The 2026 exclusion limit rises to $7,500, $3,750 for married employees filing separately. The draft Form 2441 instructions put the consequence plainly: exclude the full $7,500 and you cannot take the credit, because $7,500 exceeds both limits.
| Family B, $9,000 of expenses, two children | Expense base for the credit | Credit at 35% |
|---|---|---|
| No FSA | $6,000 | $2,100 |
| $5,000 excluded through the FSA | $1,000 | $350 |
| $7,500 excluded through the FSA | $0 | $0 |
Which is better depends on the family's marginal income tax rate plus the 7.65 percent of payroll tax the FSA also avoids, set against the credit percentage on the expenses the FSA would displace, and on the fact that the FSA can shelter up to $7,500 while the credit stops at $3,000 or $6,000. The guide HSA vs FSA covers how the accounts work; the child tax credit 2026 is the separate, larger credit the same children usually also qualify for.
This guide reports the 2026 rules from the IRS pages, the draft Form 2441 instructions and the Congressional Research Service summary of the 2025 law. The final 2026 instructions and Publication 503 for 2026 returns will carry the official table; state credits, where they exist, follow their own rules.
Frequently asked questions
How much is the child and dependent care credit for 2026?
From 20 to 50 percent of up to $3,000 of work-related care expenses for one qualifying person or $6,000 for two or more, so at most $1,500 or $3,000. The IRS says the percentage is 50 percent at adjusted gross income of $15,000 or less, decreases gradually to 35 percent as income rises, decreases again above $75,000, or $150,000 married filing jointly, and never falls below 20 percent. The 50 percent top rate is new for 2026; through 2025 it was 35 percent.
Who is a qualifying person?
Per IRS Topic 602: your dependent qualifying child who was under age 13 when the care was provided; your spouse who was physically or mentally incapable of self-care and lived with you for more than half the year; or a dependent, or someone who would have been your dependent but for certain income or filing rules, who was incapable of self-care and lived with you for more than half the year.
Do both parents have to work to claim it?
Both need earned income on a joint return, and the expenses claimed cannot exceed the smaller of your earned income or your spouse's. A spouse who was a full-time student or incapable of self-care is treated as earning $250 a month, $500 with two or more qualifying persons, for each month that applied, so a student parent does not disqualify the family.
What if I have a dependent care FSA?
Employer dependent care benefits you exclude from income, including salary you put into a dependent care flexible spending account, are subtracted from the $3,000 or $6,000 expense limit before the credit is figured. For 2026 the exclusion rises to $7,500 ($3,750 married filing separately), and the IRS points out that excluding the full $7,500 leaves no room for the credit at all, since it exceeds both limits. The FSA saves income and payroll tax on the excluded amount; the credit returns a percentage of what is left.
Is the child and dependent care credit refundable?
No. The IRS states the credit is nonrefundable: it reduces the tax you owe and no part of it beyond your tax liability is paid out as a refund. Families with little or no income tax after the standard deduction get little from it, which is why the Earned Income Tax Credit and the refundable part of the child tax credit matter more at the lowest incomes.
Sources
- IRS: Child and Dependent Care Credit information (for 2026 the credit ranges from 20 to 50 percent; 50 percent at AGI of $15,000 or less, decreasing to 35 percent, decreasing again above $75,000 or $150,000 joint, never below 20 percent; up to $1,500 or $3,000; the $7,500 and $3,750 exclusion; nonrefundable; qualifying person and earned income)
- IRS Topic no. 602, Child and Dependent Care Credit (qualifying person; the work-related and earned income tests; the $250 and $500 monthly amounts for a student or disabled spouse; the $3,000 and $6,000 limits; reduction for employer benefits; provider identification; Form 2441)
- IRS Publication 503, Child and Dependent Care Expenses (the 2025 percentage table from 35 to 20 percent in $2,000 steps; the tests in detail)
- IRS draft 2026 Instructions for Form 2441 (the 2026 decimal table from .50 to .35 and from .35 to .20; the exclusion increased to $7,500, $3,750 married filing separately; the caution that excluding the full $7,500 leaves no credit)
- Congressional Research Service, Tax Provisions in P.L. 119-21, the FY2025 Reconciliation Law (the rate phases down one percentage point for each $2,000 of AGI over $15,000 until 35 percent, then one point for each $2,000, $4,000 joint, over $75,000 or $150,000 until 20 percent; amounts not indexed; from 2026)