can you claim childcare on tax? what Australian parents need to know

why childcare isn't tax deductible

the ATO treats childcare as a private or domestic expense. even though you need childcare to go to work, the tax office doesn't consider it a cost of earning your income — it's considered a cost of having children.

this is the same logic that applies to commuting costs, everyday clothing, and meals. the ATO's position is that these are personal expenses that you'd incur regardless of your work situation. it doesn't matter whether you use long day care, family day care, before and after school care, or a private nanny — none of it is deductible.

this catches people off guard because in some countries (like the US and UK), there are tax credits or relief schemes for childcare. Australia takes a different approach: direct subsidies through CCS rather than tax breaks.

Child Care Subsidy: what you get instead

instead of a tax deduction, the Australian Government provides the Child Care Subsidy — a direct payment that covers between 0% and 90% of your childcare fees, up to an hourly cap. the subsidy is paid straight to your provider, reducing what you pay out of pocket.

for the 2025-26 financial year, the key numbers are:

• maximum subsidy rate: 90% for families earning $83,280 or less
• hourly fee cap (centre-based care): $14.63 per hour
• hourly fee cap (family day care): $12.41 per hour
• subsidy tapers to 0% at a family income of $544,958

the subsidy is based on your combined family income, the type of care you use, and your activity level (work, study, or volunteering hours). from 2026, the three day guarantee means every family gets at least 30 subsidised hours per fortnight without an activity test.

use our Child Care Subsidy calculator to see exactly what you'd receive based on your income and circumstances.

CCS vs a hypothetical tax deduction: which is worth more?

a lot of parents assume a tax deduction would save them more. let's run the numbers.

for lower-income families earning under $83,280 with a 90% subsidy rate, the gap is even larger. CCS is genuinely more generous than a deduction for the vast majority of Australian families.

what parents can actually claim on tax

while childcare is off the table, there are legitimate work-related deductions that parents (like all taxpayers) can claim:

• home office expenses — if you work from home, you can claim a fixed rate of 67 cents per hour, or calculate your actual costs for electricity, internet, phone, and depreciation of furniture and equipment
• work-related travel — travel between workplaces, client visits, or travel for work purposes (not your commute)
• uniforms and protective clothing — occupation-specific clothing, compulsory uniforms, and laundry costs
• self-education — courses, conferences, and study materials directly related to your current job
• tools and equipment — laptops, phones, software, and other items you use for work (apportioned for private use)
• income protection insurance — premiums are deductible if the policy covers loss of income

the key test is always the same: the expense must have a direct connection to earning your income. keep records and receipts for everything you claim.

what about nannies and au pairs?

nanny fees are not tax deductible either. however, if your nanny operates through an approved in-home care service, you may qualify for CCS on those fees. the service needs to be registered with the Department of Education, and the nanny must meet qualification requirements.

private nanny arrangements — where you hire someone directly — don't attract CCS. the same applies to au pairs, babysitters, and informal care arrangements with family or friends.

if you employ a nanny directly, keep in mind you'll have employer obligations including superannuation (if you pay them $450 or more per month), PAYG withholding, and workers' compensation insurance.

frequently asked questions