If you pay for child care or care for a disabled family member so you can work, the child and dependent care credit can return a share of those costs on your tax return.
This guide gives the rate, the expense limits, who and what qualifies, how a dependent care FSA changes the result and worked examples, using the 2025 Form 2441 instructions and IRS Publication 503.
The IRS says that if you paid someone to care for your child or another qualifying person so you (or your spouse on a joint return) could work or look for work, you may take the credit for child and dependent care expenses, claimed on Form 2441. You and your spouse must have earned income, with exceptions for a full-time student or disabled spouse. The credit is nonrefundable: it is limited to your tax and you cannot get a refund for any part above that. Enter it on Schedule 3 (Form 1040), line 2; see our Schedule 3 guide. This guide covers the rules for 2025 returns filed in 2026; for expenses paid in 2026 the rate changes; see the 2026 section below.
| Item | Rule (2025 returns) |
|---|---|
| Credit rate | Up to 35% of work-related expenses, falling 1 point for each $2,000 of adjusted gross income above $15,000, to 20% over $43,000 |
| Expense limit, one qualifying person | $3,000 |
| Expense limit, two or more qualifying persons | $6,000, even if you only paid for one of them |
| Other limit | Expenses cannot exceed the smaller of your earned income and your spouse's earned income |
| Dependent care benefits | Employer benefits you exclude reduce the dollar limit; the exclusion is up to $5,000 ($2,500 if married filing separately) for 2025, rising to $7,500 ($3,750) for 2026 |
The percentage depends on the adjusted gross income on Form 1040 line 11a, and the IRS table runs from 35% to 20%.
| Item | 2025 returns | 2026 tax year (returns filed in 2027) |
|---|---|---|
| Top credit rate | 35% | 50% (adjusted gross income of $15,000 or less) |
| Lowest rate | 20% over $43,000 | 20%, reached only at higher incomes |
| Second step down | None | The rate falls again above $75,000 ($150,000 if married filing jointly) |
| Expense limits | $3,000 / $6,000 | $3,000 / $6,000, so the maximum credit is $1,500 / $3,000 |
| Dependent care benefit exclusion | $5,000 ($2,500 if married filing separately) | $7,500 ($3,750 if married filing separately) |
The IRS says the rate declines from 50% toward 35% as income rises above $15,000, then declines again above $75,000 ($150,000 if married filing jointly), and never falls below 20%. Its credit information page does not give the full 2026 percentage table, so check the 2026 Form 2441 instructions before relying on a rate between those points. The credit stays nonrefundable.
| Case | Calculation | Credit |
|---|---|---|
| One child, AGI over $43,000, $5,000 of care paid | Expenses capped at $3,000; 20% x $3,000 | $600 |
| Two children, AGI $15,000 or less, $7,000 paid | Expenses capped at $6,000; 35% x $6,000 | $2,100 |
| Two children, $6,000 paid, $5,000 excluded from a dependent care plan, AGI over $43,000 | $6,000 limit less $5,000 excluded = $1,000; 20% x $1,000 | $200 |
The last case follows the IRS Publication 503 example in which a taxpayer with the maximum $5,000 dependent care exclusion can figure the credit on only $1,000. Examples assume earned income is at least the expense used and ignore other limits.
| Requirement | IRS rule |
|---|---|
| Qualifying person | A qualifying child under age 13 whom you can claim as a dependent, a disabled spouse, or another disabled person who lived with you more than half the year and whom you can claim as a dependent (or could claim apart from certain income, joint return or dependent-of-another tests) |
| Filing status | Single, head of household, qualifying surviving spouse or married filing jointly; married filing separately only if you meet the unmarried rules |
| Care provider | Not your spouse, the parent of your qualifying child or a person you can claim as a dependent; your own child must be 19 or older and not your dependent |
| Expenses | Day camp counts; overnight camp, summer school and tutoring do not; child support is not a qualified expense |
Put the provider's name, address and taxpayer identification number on the form; Form W-10 is one way to get it. The IRS notes that nannies are generally household employees while daycare centers are not, so you may owe household employment taxes. Each qualifying person's Social Security number is required. If you are unmarried with a child, see our head of household guide and our Schedule 8812 guide for the child tax credit.
Dependent care benefits your employer provides appear in box 10 of Form W-2 and you complete Part III of Form 2441 to exclude them before figuring the credit. See our Form W-2 guide. Expenses you pay in 2025 for care provided in 2026 can only be used for your 2026 credit, and if you had work-related expenses in 2024 that you paid in 2025 without claiming the maximum for 2024, you may be able to increase your 2025 credit using Worksheet A in the Form 2441 instructions. See also our FSA contribution limits guide.
IRS: Instructions for Form 2441, Child and Dependent Care Expenses, IRS: Publication 503, Child and Dependent Care Expenses.