The Real Cost of Daycare in 2025

For many American families, the decision to have children comes bundled with a financial question nobody fully prepares for: can we actually afford childcare?

The answer, for a growing number of families, is barely — or not at all.

The national average price of childcare reached $13,128 per year in 2024, a figure that would consume 10% of a married couple's median household income — and a staggering 35% of a single parent's.¹

That average obscures how bad it gets at the high end. For families with two children — one toddler and one infant — the average annual daycare bill nationwide hit $28,168, roughly 35% of median household income.² In Massachusetts, that figure climbs to $47,012, consuming 44% of the state's median household income.²

The government's own definition of "affordable" childcare is care that costs no more than 7% of household income. That threshold is not met in a single U.S. state.³

Childcare prices rose 29% from 2020 to 2024 — outpacing overall inflation by 7 percentage points over the same period.¹ As of late 2025, childcare costs were rising at 5.2% annually, more than 1.5 times the overall inflation rate.⁴

The New York Times recently reported that in Connecticut — where many of our users are based — the average cost of toddler care was $18,829 per year in 2024, representing 15% of the median state family income.⁵ That's more than many families pay in rent.

In 45 states and Washington D.C., the average annual price of childcare for two children at a center exceeded annual mortgage payments. In 49 states and D.C., it exceeded median annual rental payments.¹

To put it plainly: for families with two young children in most of the country, childcare is now the single largest line item in the household budget.

Here's the conversation that happens in kitchens and parked cars across America, usually around the time of a first or second pregnancy: if we put the baby in daycare, and I go back to work, does it actually make financial sense?

It's a deceptively complex question. The gross salary number is almost never the right one to use. What matters is the net take-home after taxes — and for a second earner, the marginal tax rate on that income can be high. Subtract daycare costs, subtract any changes to commuting, and sometimes the actual monthly gain from working is much smaller than expected.

In some cases — particularly for lower-earning second earners in high-cost childcare states — the math barely works or doesn't work at all in the short term.

This doesn't mean staying home is the right choice. Career continuity, long-term earnings potential, professional benefits, and personal fulfillment all belong in the calculation. But families deserve to make that decision with clear eyes, not on the basis of gross salary alone.

Use a Dependent Care FSA. If your employer offers a Dependent Care Flexible Spending Account, you can contribute up to $5,000 per year in pre-tax dollars toward childcare costs. That reduces your taxable income and lowers the effective cost of care — roughly $1,000–$1,500 in savings for a family in a moderate tax bracket.

Check your state's subsidy programs. Federal childcare subsidy funding flows to states, which administer it through voucher and certificate programs for qualifying families. Eligibility thresholds vary significantly by state and are often higher than people assume. Connecticut's Care4Kids program, for example, serves families earning up to 85% of the state median income.

Consider the Child and Dependent Care Tax Credit. Families can claim up to $3,000 in childcare expenses for one child (or $6,000 for two or more) for purposes of this federal credit. The credit rate ranges from 20–35% of qualifying expenses depending on income, providing up to $1,050 for one child or $2,100 for two.

Run the actual numbers before deciding anything. The break-even calculation — does my take-home salary exceed my childcare cost? — is the starting point, not the end point. Factor in commuting costs, changes to benefits, and what you'd lose or gain in career trajectory.

Whether you're trying to figure out if you can afford daycare at all, whether it makes sense for a second earner to return to work, or how daycare fits into your broader family budget alongside a mortgage or rent payment — the answer lives in your specific numbers, not national averages.

canweaffordthis.com includes a free Daycare Scenario that lets you model the full picture: gross childcare cost, FSA savings, any lost income if one parent reduces hours, and the net monthly impact on your family's cash flow. It shows your monthly surplus, emergency runway, and a plain-English verdict — so you can make the decision with confidence rather than anxiety.

The childcare crisis is real, and the policy response has been inadequate. But in the meantime, families navigating this decision deserve tools that give them the clearest possible picture of where they actually stand.

How much does daycare cost per month in the U.S.? The national average for center-based daycare is roughly $1,094 per month per child, though costs vary dramatically by state — from around $568/month in Mississippi to over $2,000/month in Washington D.C. and Massachusetts.

Is daycare tax deductible? Not directly deductible, but you can use a Dependent Care FSA to pay for childcare with pre-tax dollars (up to $5,000/year), and you may qualify for the federal Child and Dependent Care Tax Credit, worth up to $1,050 for one child or $2,100 for two.

At what income does daycare stop making financial sense? There's no universal answer — it depends on your state, tax situation, and childcare costs. The break-even point is where your net take-home pay after taxes equals or exceeds your monthly daycare bill. Tools like canweaffordthis.com can model this for your specific situation.

What is the government's definition of affordable childcare? The U.S. Department of Health and Human Services defines affordable childcare as costing no more than 7% of household income. According to Child Care Aware of America, no U.S. state meets this definition for center-based infant or toddler care.

Does the second parent's salary cover daycare costs? In many cases, barely. After accounting for federal and state income taxes on a second earner's marginal income, plus daycare costs and any commuting or work-related expenses, the net financial gain can be significantly smaller than the gross salary suggests. Running a full cash-flow analysis before making this decision is strongly recommended.

¹ Child Care Aware of America. (2025). Child Care in America: 2024 Price & Supply. https://www.childcareaware.org/price-landscape24/

² Axios. (2025, May 24). Cost of child care rising faster than inflation, new report says. https://www.axios.com/2025/05/24/child-care-costs

³ World Population Review. (2025). Child care cost by state 2026. https://worldpopulationreview.com/state-rankings/child-care-costs-by-state

⁴ Bank of America Institute. (2025, October). The many costs of childcare. https://institute.bankofamerica.com/content/dam/economic-insights/childcare-costs.pdf

⁵ Elkeurti, A. & Miller, C.C. (2026, March 5). Child care has always been a large expense in parents' lives. Recently, it has become even more so. The New York Times. https://www.nytimes.com/2026/03/05/upshot/child-care-expensive-prices.html