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Tax Breaks for Busy Parents: Tax Credits for Child and Dependent Care in 2026

By Honorine Campisi • 04/20/2026

If you pay for childcare or care for a dependent so you can work, you may be able to save money on your taxes. There are two main ways to get tax breaks: the Child and Dependent Care Credit and the Dependent Care Assistance Program (DCAP) through your employer. Here’s what you need to know for 2026.

  1. Child and Dependent Care Credit (2026)

          This is a tax credit for people who pay for care for a child under 13, a spouse, or another dependent who can’t care for themselves, so you can work or look for work.

 

          Who qualifies?

  • You (and your spouse, if married) must have earned income.
  • The care must be so you can work or look for work.
  • The person cared for must live with you for more than half the year.
  • You can’t pay your spouse, the child’s parent, or your own child under 19 for the care.

          How much can you claim?

  • You can use up to $3,000 of expenses for one person, or $6,000 for two or more.
  • The credit is a percentage of your expenses, based on your income.
  • For 2026, the maximum percentage is 50%. This goes down as your income goes up, but won’t go below 20%.
  1. Dependent Care Assistance Program (DCAP)

          Many employers offer a Dependent Care FSA, which lets you set aside money from your paycheck before taxes to pay for child or dependent care.

 

          2026 limits:

  • You can set aside up to $7,500 on a pre-tax basis ($3,750 if married filing separately).

          How it works:

  • You choose how much to set aside for the year (up to the limit).  If you do not use all of your deferral, it is added back to your income.
  • The money is taken out of your paycheck before taxes.
  • You use it to pay for care and get reimbursed.

         Important:

         You can’t use the same expenses for both the credit and the DCAP. If you use a DCAP, it will reduce or eliminate your child and dependent care credit.

  1. Which Should You Use?
  • If your employer offers a DCAP, it can save you money by lowering your taxable income.  This is often better for higher earners.
  • The credit may be better for lower-income families or if you have more than one child and high expenses.
  • You may be able to use both, but not for the same dollar of expense.

         For 2026, both the Child and Dependent Care Credit and employer DCAPs can help working families save on taxes. Check with your CPA to see what is best for you.

 

Honorine M. Campisi, CPA

     

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