Child Care Subsidy Explained

How the subsidy works

Services Australia pays the subsidy directly to your child care service, which takes it off your bill. What is left is your gap fee. Your subsidy percentage applies to your service’s hourly fee or the government’s hourly rate cap, whichever is lower.

Services Australia also holds back 5% of your subsidy each fortnight. It does this so you are less likely to be overpaid and end up with a debt. When it balances your payments, it pays you any subsidy you are still owed. You can change the withholding amount online up to twice a financial year.

How much you get: 2026–27 rates

Your percentage depends on your family’s combined income. If it is $88,520 or less, you get 90%. Above that, the rate falls by 1 percentage point for every $5,000 of extra income, and reaches zero at $538,520.

A higher rate for a second child

If you have more than one child aged 5 or under in care, your second and younger children can get a higher rate. It is 95% for families earning up to $146,437, steps down to 80% from $191,437, and stops applying once family income reaches $370,727. Your eldest child in that age group usually gets the standard rate.

Hourly rate caps

The government does not set child care fees. It sets a cap on the hourly fee it will subsidise, which the Department of Education describes as a guide to what a high fee might be. If your service charges more than the cap, you pay the whole difference yourself.

How many hours are subsidised

From 5 January 2026, the 3 Day Guarantee gives every eligible family at least 72 hours of subsidised care a fortnight for each child. That is about three days a week, whatever your work or study hours.

You can get 100 hours a fortnight for each child if any of these apply to you:

• you do more than 48 hours of work, study, training or volunteering a fortnight
• you care for an Aboriginal and/or Torres Strait Islander child
• you have an approved exemption
• you get Additional Child Care Subsidy for child wellbeing, temporary financial hardship or as a grandparent

You still pay a gap fee on subsidised hours, except in certain circumstances.

Worked example

Take a family earning $120,000 a year with one child in centre-based day care. Their subsidy rate is 83.70%. The table shows what they would pay for a 10-hour day at the national average fee for centre-based care in the June quarter 2026, and at the ACT average, which is above the cap.

In the ACT example, Services Australia works out the subsidy on the $15.19 cap, so the family pays everything above it. These figures are before the 5% withholding, and real fees vary by service. To estimate your own subsidy, use the Child Care Subsidy calculator on the government’s Starting Blocks website.

Who can get it

To get the subsidy, you need to:

• care for your child at least 2 nights a fortnight, or have at least 14% of their care
• be responsible for paying fees at an approved child care service
• meet residency requirements

Your child must be 13 or younger (with some exceptions), not yet at secondary school, and meet immunisation requirements. If your child doesn’t attend care at least once in 26 weeks in a row, your eligibility stops and you need to claim again.

What families pay: the latest data

In the June quarter 2026, 1,456,930 children from 1,049,450 families attended approved child care, and 47.8% of children aged 0 to 5 used it. On average, children attended 26.8 hours a week.

The cap for centre-based care that quarter was $14.63 an hour. Average fees were above it in Australian Capital Territory ($16.50), Western Australia ($14.90), New South Wales ($14.85) and Victoria ($14.65). Across Australia, 56.7% of centre-based services charged an average fee at or under the cap. The government spent $3.88 billion on child care subsidies in the quarter.

For how child care fits with the rest of the unpaid work families do, see The Unpaid Care Divide. For leave before your child starts care, see Parental Leave in Australia.