Child Care Tax Credit 2026: What Working Texas Parents Can Claim

What is the Child and Dependent Care Credit?

It is a federal income tax credit for part of what you pay for child care so you can work or look for work. It applies to care for your qualifying child who was under age 13 when the care was provided (IRS Publication 503). You claim it on Form 2441 with your federal return.

Two rules trip people up. First, the costs you count can't be more than your earned income, or the smaller of your and your spouse's earned income if you are married (IRS Tax Topic 602). Second, the credit is a percentage of your costs, not the full amount you paid.

How much can you claim for 2025 (the return you file in 2026)?

You can count up to $3,000 of care costs for one qualifying child, or $6,000 for two or more (IRS Publication 503). The credit is up to 35% of those costs if your adjusted gross income (AGI) is $15,000 or less, and the rate steps down to 20% once AGI is above $43,000 (IRS Publication 503 table).

That makes the largest possible 2025 credit $1,050 for one child or $2,100 for two or more (our calculation: expense limit × top rate). Families with AGI over $43,000 get the 20% rate, which works out to at most $600 or $1,200 (our calculation).

What changes for tax year 2026?

Public Law 119-21, signed in 2025, raised the credit rate for tax years beginning after December 31, 2025 (Public Law 119-21, section 70405). As of September 16, 2026, the IRS had not yet published a 2026 rate table, so the figures below come straight from the law (26 U.S. Code § 21).

• The top rate becomes 50% for AGI of $15,000 or less.
• It drops 1 percentage point for each $2,000 of AGI over $15,000, but not below 35%.
• It drops again by 1 point for each $2,000 over $75,000 ($4,000 over $150,000 on a joint return), but not below 20%.
• The expense limits stay the same: $3,000 for one child, $6,000 for two or more.

By our reading of the statute, that means a 35% rate for AGI between roughly $43,000 and $75,000 on any return, and a 20% floor above about $103,000 for single filers or $206,000 for joint filers. So a family with AGI between $43,000 and $75,000 moves from a 20% rate to 35%.

Does daycare, after-school care, or summer day camp count?

According to IRS Publication 503:

• Daycare, preschool, and Pre-K: yes. Programs below the level of kindergarten are care expenses.
• Kindergarten or school tuition: no. Attending kindergarten or a higher grade isn't a care expense.
• Before- and after-school care: yes, it may count for a child in kindergarten or a higher grade.
• Summer day camp: yes, it may count, even a camp that focuses on one activity.
• Overnight camp: no.

Can you use a dependent care FSA too?

If your employer offers a dependent care FSA, the yearly limit rises from $5,000 to $7,500 for 2026 ($2,500 to $3,750 if married filing separately) (IRS Publication 15-B). But you can't count the same dollars twice: FSA benefits you exclude from income must be subtracted from the credit's $3,000 or $6,000 limit (IRS Tax Topic 602). Compare both options with a tax professional before open enrollment.

What if you get a CCS child care scholarship?

CCS scholarships are funded through the Texas Workforce Commission and run by local Workforce Solutions boards (Texas Workforce Commission). IRS Publication 503 doesn't mention CCS by name, but it has a rule for this situation: if a state social services agency pays part of your child care costs, you can't count the part it paid (IRS Publication 503). Applied here, you would count only what you paid out of pocket, such as your copay. Confirm with a tax professional.

New to CCS? Our step-by-step CCS Child Care Scholarship guide explains who may be eligible and how we help you apply, and our published weekly tuition rates show exactly what care costs before any help.

Is there a Texas child care tax credit?

Texas does not have a personal income tax (Texas Comptroller), so there is no state income tax return and no state child care income tax credit to claim. For Texas families, the federal credit and CCS scholarships are the main ways to offset child care costs.

What about the Child Tax Credit?

The Child Tax Credit is a separate credit. It is worth up to $2,200 per qualifying child for 2025, with up to $1,700 refundable (IRS), and the same $2,200 and $1,700 amounts apply for 2026 (IRS Revenue Procedure 2025-32). The full credit is available if your income is not more than $200,000, or $400,000 on a joint return (IRS Child Tax Credit page).

Does your employer have a child care credit?

Employers can claim their own credit for helping employees with child care. Starting in tax year 2026 it covers 40% of qualifying costs (50% for eligible small businesses), up to $500,000 a year ($600,000 for eligible small businesses) (IRS). If your employer doesn't offer child care help, it is worth asking HR about.

What do you need from your daycare to claim it?

To claim the credit you must list the care provider's name, address, and taxpayer identification number, which for a center is its employer identification number (EIN). You can use Form W-10 to request it (IRS Publication 503).

ABC Early Learning Academy provides its EIN and your payment records on request. Just ask the front office.

Common questions

More answers about tuition, meals, and enrollment are in our parent FAQ.