Yes, you may be able to claim daycare expenses on your federal income tax return through the Child and Dependent Care Credit. The daycare must generally allow you—and your spouse when filing jointly—to work or actively look for work.
You cannot claim every dollar paid for daycare. The IRS limits the amount of expenses used to calculate the credit, and several eligibility requirements apply. For a 2025 federal return, the credit may equal 20% to 35% of qualifying expenses, depending on your adjusted gross income.
Who Qualifies for the Daycare Credit?
Daycare expenses may qualify when the care is provided for one of the following people:
- Your qualifying child who was under age 13 when the care was provided;
- Your spouse who was physically or mentally unable to care for themselves; or
- Another qualifying dependent who was physically or mentally unable to care for themselves.
The qualifying person generally must have lived with you for more than half of the tax year. A child who turns 13 during the year qualifies only for expenses incurred before the child’s 13th birthday.
Must the Daycare Allow You to Work?
Yes. The daycare expense must be work-related. This means you paid for care so that you could:
- Work for an employer;
- Operate your own business; or
- Actively look for employment.
For married couples filing jointly, both spouses generally must work or look for work. Both must also have earned income, although special rules may treat a full-time student or a spouse unable to care for themselves as having a limited amount of earned income.
Paying for daycare simply to obtain free time, attend social events or complete personal errands does not qualify.
A person who looked for work but did not find employment and had no earned income for the year generally cannot claim the credit. An exception may apply when the taxpayer or spouse was a qualifying full-time student or was unable to care for themselves.
How Much Daycare Expense Can You Claim?
For a 2025 federal return, the maximum amount of eligible expenses used to calculate the credit is:
- $3,000 for one qualifying person; or
- $6,000 for two or more qualifying people.
These are expense limits, not the amount of the credit itself. The credit equals between 20% and 35% of the eligible expenses after applying the income and other limitations.
The maximum possible credit is therefore:
- $1,050 for one qualifying person; or
- $2,100 for two or more qualifying people.
These maximum credits apply when the 35% rate is available. For taxpayers with adjusted gross income above $43,000, the applicable percentage is generally 20%, producing a maximum credit of $600 for one qualifying person or $1,200 for two or more.
The Child and Dependent Care Credit is generally nonrefundable. It can reduce your federal income-tax liability, but the unused portion generally cannot be paid to you as a refund.
Which Daycare Expenses Qualify?
Qualifying expenses may include payments made to:
- A licensed daycare centre;
- A nursery school or preschool;
- A babysitter;
- A nanny;
- A before-school or after-school programme;
- A day camp; or
- A person providing care inside or outside your home.
A day camp may qualify even when it specialises in an activity such as sports or computers, provided its main purpose is childcare while you work. Overnight camps do not qualify.
Preschool or nursery-school expenses can generally qualify because their main purpose is considered childcare. However, tuition for kindergarten or a higher grade is considered an education expense and does not qualify.
Before-school and after-school care may qualify when the childcare portion can be separated from tuition or educational expenses. Tutoring, summer school and ordinary school tuition do not qualify.
Can Food and Other Daycare Charges Qualify?
Food, education, entertainment and clothing are generally not qualifying childcare expenses when charged separately.
However, these costs may be included when they are incidental to the childcare and cannot be separated from the daycare provider’s total charge. For example, a daycare centre’s single monthly fee may include meals and activities. You do not necessarily have to separate those incidental amounts when the provider does not charge for them separately.
Can You Pay a Relative for Daycare?
Payments to certain relatives may qualify, even when the person is not a licensed daycare provider. However, you cannot claim amounts paid to:
- Your spouse;
- The parent of the qualifying child;
- Someone you or your spouse can claim as a dependent; or
- Your child who was under age 19 at the end of the tax year.
For example, payments to the child’s grandparent may qualify when the grandparent is not your dependent and all other requirements are satisfied. The grandparent must generally report the payment as income.
When a babysitter or nanny works in your home under your direction, that person may be your household employee. Employment-tax and reporting responsibilities may apply in addition to the childcare-credit rules.
What Information Do You Need From the Daycare?
You generally need to report the care provider’s:
- Name;
- Address; and
- Social Security number or employer identification number.
You can ask the provider to complete Form W-10, Dependent Care Provider’s Identification and Certification. A tax-exempt organisation generally requires only its name and address.
Keep invoices, receipts, payment records and attendance information. Cash payments may qualify, but you still need reliable records showing the amount paid and the provider’s identity.
If the provider refuses to give you the required identification number, the IRS may still permit the credit when you can demonstrate that you made a serious effort to obtain it. You should report the available information and follow the Form 2441 instructions.
Can Divorced Parents Claim Daycare Expenses?
Special rules apply to divorced, separated or unmarried parents who live apart.
The custodial parent may generally treat the child as a qualifying person for the daycare credit. This is usually the parent with whom the child lived for the greater number of nights during the year.
The noncustodial parent generally cannot claim the Child and Dependent Care Credit, even when that parent is allowed to claim the child as a dependent under Form 8332. Releasing the dependency claim does not transfer the daycare credit to the noncustodial parent.
Can You Use a Dependent Care FSA and Claim the Credit?
You may be able to use an employer’s dependent care flexible spending account, or DCFSA, to pay eligible daycare expenses with pretax money.
For 2025, the maximum amount generally excluded from income through a dependent-care assistance programme is $5,000, or $2,500 for married taxpayers filing separately. These benefits are usually shown in Box 10 of Form W-2.
You cannot use the same daycare expense for both the tax-free employer benefit and the credit. Employer-provided dependent-care benefits reduce the amount of expenses available for calculating the credit.
For example, parents with two qualifying children may have a $6,000 credit expense limit. If they exclude $5,000 through a dependent care FSA, only as much as $1,000 may remain for calculating the credit, assuming all other requirements are satisfied.
How Do You Claim Daycare on Your Return?
You must complete Form 2441, Child and Dependent Care Expenses, and attach it to Form 1040, Form 1040-SR or Form 1040-NR.
Form 2441 reports the qualifying person, eligible expenses, care-provider information, earned income and any dependent-care benefits received through an employer.
Married couples generally must file jointly to claim the credit. A married person filing separately may qualify only under limited rules, such as living apart from the spouse during the last six months of the year, maintaining the qualifying person’s main home and paying more than half the cost of maintaining that home.
The Bottom Line
You may claim eligible daycare costs through the Child and Dependent Care Credit when the care allows you and, when applicable, your spouse to work or look for work.
For a 2025 return, the credit is calculated using up to $3,000 of expenses for one qualifying person or $6,000 for two or more. Keep payment records and obtain the daycare provider’s name, address and tax identification number. Employer-provided dependent-care benefits must also be reported, and the same expenses cannot be used twice.
