What the child care tax credit covers

The child care tax credit reduces your federal income tax based on what you paid for child care while you worked or looked for work. The credit covers expenses for children under age 13 — daycare centers, in-home providers, summer camps, and after-school programs all count. It does not cover overnight camps, kindergarten tuition (unless the program includes child care), or care by a spouse or dependent.

The credit is not a refund. It lowers the tax you owe, dollar for dollar, up to a limit. If you owe $800 in federal tax and claim a $1,200 credit, your tax drops to zero — but you do not receive the extra $400. Some taxpayers may get a partial refund through the refundable portion of the credit, but that depends on your income and filing status.

You claim the credit on Form 1040 when you file your 2025 tax return in early 2026. The IRS uses the information you provide — your child's name and Social Security number, the provider's name and tax ID, and the amount you paid — to calculate your credit.

Key Takeaways

  • The credit covers up to $3,000 in child care expenses per child per year, with a maximum of $6,000 for two or more children, and reduces your federal tax dollar for dollar up to the credit amount.
  • Your credit percentage depends on your adjusted gross income: households earning $15,000 or less get 35 percent of expenses, and the percentage drops as income rises, reaching 20 percent at $43,000 and above.
  • You must have earned income (from work or self-employment) during the year to claim the credit, and your spouse must also have earned income if you file jointly.
  • The provider must give you their tax ID or Social Security number; if you cannot obtain it, you cannot claim the credit for that provider's expenses.
  • A portion of the credit may be refundable if your income is below certain thresholds, meaning you could receive money back even if you owe no tax.

How much the credit is worth based on your income

The percentage of child care expenses you can claim as a credit slides downward as your income rises. If your adjusted gross income is $15,000 or less, you can claim 35 percent of your expenses. For every $2,000 your income exceeds $15,000, the percentage drops by one point, until it reaches 20 percent at $43,000 and stays there for all higher incomes.

The maximum expenses you can claim are $3,000 per child per year, or $6,000 total if you have two or more children. That means the highest credit you can receive is $2,100 (35 percent of $6,000) if your income is $15,000 or less. At the 20 percent rate, the maximum credit is $1,200 (20 percent of $6,000).

Your adjusted gross income is the number on your tax return before you claim the standard deduction or itemized deductions. It includes wages, self-employment income, and certain other sources. The IRS uses this figure to determine your credit percentage.

Who can claim the credit

You must have earned income during 2025 to claim the credit. Earned income means wages from a job, net self-employment income, or taxable alimony received. Income from investments, Social Security, unemployment benefits, or child support does not count as earned income for this purpose.

If you are married and file jointly, both spouses must have earned income, or one spouse must have earned income and the other must be a full-time student or unable to care for themselves. If you are single or head of household, you need only your own earned income.

The child must be your dependent, under age 13 at the end of 2025, and must live with you for more than half the year. A dependent is someone you claim on your tax return — usually your biological child, adopted child, or stepchild, though other relationships may have access to under specific rules.

What expenses count and which do not

Expenses that count include daycare center fees, nanny or babysitter wages, after-school program fees, and summer day camp fees. The provider can be a relative, friend, or business, as long as they are not your spouse or a dependent you claim on your taxes. You can count the cost of meals and transportation if they are part of the care arrangement.

Expenses that do not count include overnight camps, kindergarten tuition (unless the school provides before or after-school child care and bills it separately), school tuition for grades 1 and up, and care by your spouse or a dependent. You also cannot claim expenses paid with pre-tax dollars from a dependent care account through your employer — you claim either the account deduction or the tax credit, not both.

Keep receipts or invoices showing the provider's name, the dates of care, and the amount paid. If the provider is a business, get their Employer Identification Number (EIN). If they are self-employed or an individual, get their Social Security number. Without this information, you cannot claim the expenses.

How to report the credit on your tax return

You report the credit using Form 2441, Child and Dependent Care Expenses, which you attach to your Form 1040. On Form 2441, you list each provider's name, address, and tax ID, along with the amount you paid them. You also enter your adjusted gross income and let the form calculate your credit percentage and the credit amount.

The form then tells you how much of your credit is refundable — meaning how much you can receive back even if you owe no tax. The refundable portion depends on your income and filing status. For 2025, if your adjusted gross income is below $400,000, a portion of your credit may be refundable, though the exact amount varies.

You can file your return on paper or electronically using tax software or a tax professional. If you use software, it will walk you through Form 2441 and calculate the credit for you. If you file on paper, you must complete the form yourself or have a tax professional do it.

What happens if you paid a provider without their tax ID

If you paid a provider but do not have their tax ID or Social Security number, you cannot claim those expenses on your return. The IRS requires the provider's identifying number to process the credit. Before you pay a provider, ask for their tax ID or Social Security number and verify it is correct.

If you already paid someone and cannot locate their number, contact them directly and ask. Many providers are willing to provide this information retroactively. If the provider is no longer reachable or refuses to provide it, you will have to leave those expenses off your return.

Some taxpayers worry about reporting a provider's information to the IRS. The IRS uses this information to verify that the provider received the income they reported, but reporting does not trigger an audit of the provider. It is a normal part of the tax system.

The refundable portion of the credit

Part of the child care credit can be refundable, meaning you receive it even if you owe no federal tax. The refundable amount depends on your adjusted gross income and filing status. Generally, the lower your income, the larger the refundable portion.

For example, if you are single, have an adjusted gross income of $20,000, and claim $2,000 in child care expenses, your credit percentage is 33 percent, making your total credit $660. A portion of that $660 may be refundable — you would receive that amount as a refund even if you owe no tax. The exact refundable amount is calculated on Form 2441.

This refundable feature makes the credit valuable even for lower-income households that owe little or no federal tax. It is one reason to claim the credit even if you think you will owe nothing.

Frequently Asked Questions

Can I claim the credit if I use my parents or in-laws for child care?

Yes, if they are not your spouse or a dependent you claim on your taxes. You will need their Social Security number or tax ID. If they are your dependent, you cannot claim the credit for their care services, even if you paid them.

What if my child care expenses were paid by my employer's dependent care account?

You cannot claim the tax credit for expenses paid with pre-tax dollars from a dependent care account. You must choose between the account deduction and the tax credit. Most households benefit more from the account because it reduces both income and payroll taxes, but compare the two to be sure.

Do I have to report the provider's income to the IRS?

No. You report the provider's name and tax ID on your return, but you do not file a separate form reporting their income. The IRS matches your report to their tax records. If they did not report the income, that is between them and the IRS.

Can I claim the credit for a nanny who lives in my home?

Yes. You can claim the credit for a nanny's wages as long as they are not your spouse or a dependent. You will need their Social Security number. If you paid them $2,300 or more in 2025, you must also file Form 8821 (Household Employment Taxes) with your return.

What if my child turned 13 during 2025?

You can claim expenses paid before the child's 13th birthday. Expenses paid after the birthday do not count. If you have multiple children and one turned 13, you can still claim for the younger children and for the older child's care before the birthday.