What Daycare Actually Costs and Where the Money Goes

Daycare costs vary widely depending on your location, the child's age, and the type of care

Daycare is one of the largest expenses families face, and the price depends almost entirely on where you live and what kind of care you choose. A full-time infant in a licensed center in a major city can cost $15,000 to $30,000 per year. The same child in a rural area or in family daycare might cost $8,000 to $15,000 per year. Preschoolers are typically cheaper than infants because they need less one-on-one supervision. Before-and-after school care for school-age children usually costs less than full-time infant care.

The type of care matters as much as location. Licensed child care centers have the highest overhead and charge the most. Family daycare providers (someone caring for children in their home) usually charge less. Nanny care — a person coming to your home — can range from less than center care to much more, depending on whether you're sharing a nanny with another family. Unlicensed care is cheaper but comes with different risks and fewer protections.

Key Takeaways

• Daycare costs range from roughly $8,000 to $30,000 per year depending on your location, the child's age, and whether you choose a center, family provider, or nanny.
• Infants cost the most because they require the most staff per child; preschoolers and school-age children cost less.
• Licensed centers are more expensive than family daycare providers, but both are regulated differently depending on your state.
• Many families reduce costs through employer subsidies, tax credits, or state-funded pre-K programs, which you should check before budgeting the full amount.

What you actually pay depends on your state and neighborhood

Your state sets the rules for what providers can charge and what they must spend on staff and facilities, but it does not set the price. Individual providers do. In Massachusetts, full-time infant care in a center averages around $18,000 to $25,000 per year. In Mississippi, the same care averages $6,000 to $10,000 per year. Within a single state, a center in the city charges more than one in the suburbs, which charges more than one in a rural area.

Family daycare providers in the same state can vary by $5,000 or more per year depending on their location, experience, and whether they are licensed. Some states require licensing for any provider caring for more than a certain number of children (often three or four); others do not. Licensed providers typically charge more because they have met training requirements, passed inspections, and carry liability insurance. Unlicensed providers have fewer overhead costs and charge less, but you have fewer legal protections if something goes wrong.

Infant care costs more than care for older children

Infants require the most staff because regulations limit how many babies one adult can supervise — usually one adult per three to four infants, depending on your state. Toddlers allow a higher ratio, usually one adult per four to six children. Preschoolers allow even higher ratios. Because staff is the largest cost in any center, infant care is the most expensive age group. A center might charge $20,000 per year for an infant and $12,000 per year for a preschooler in the same building.

This ratio requirement applies to licensed centers and, in most states, to licensed family daycare homes. An unlicensed provider can care for more children at once, which is why unlicensed care is cheaper — but it also means less individual attention and no state oversight of safety or training.

Licensed centers, family providers, and nannies have different price ranges

A licensed child care center is a business with a building, utilities, equipment, and multiple staff members. Full-time infant care in a center typically ranges from $12,000 to $30,000 per year depending on location. Preschool in the same center might range from $8,000 to $20,000 per year. Before-and-after school care is usually $5,000 to $12,000 per year because children are in school for part of the day.

Family daycare providers operate from their home and have lower overhead. Full-time infant care with a family provider typically costs $8,000 to $18,000 per year. Preschool care is usually $6,000 to $14,000 per year. These providers may be licensed or unlicensed; licensing requirements vary by state and by how many children they care for.

A nanny coming to your home costs roughly $15,000 to $35,000 per year depending on location, experience, and whether you're paying for one child or sharing the nanny with another family. You pay the nanny directly, and you are responsible for payroll taxes and, in most states, workers' compensation insurance. Some families split a nanny's cost with another family, which cuts the expense roughly in half but requires finding a compatible family and managing a shared arrangement.

Subsidies, tax credits, and pre-K programs can lower your out-of-pocket cost

Many families do not pay the full sticker price because of employer subsidies, government tax credits, or state-funded pre-K programs. Your employer may offer a dependent care account (also called a Flexible Spending Account or FSA) that lets you set aside up to $5,000 per year in pre-tax dollars for daycare. This reduces your taxable income and can save you $1,000 to $2,000 per year depending on your tax bracket.

The federal Child and Dependent Care Tax Credit lets you claim a portion of daycare costs on your tax return. The amount varies based on your income and how much you spent, but it can reduce your taxes by $600 to $3,000 per year. Some states offer additional tax credits or subsidies for families below certain income thresholds. A few states fund pre-K programs for three- or four-year-olds, which can be free or low-cost and reduce your daycare bill for that year.

Some employers offer daycare subsidies or on-site care, which can cut your costs significantly. Ask your HR department whether your employer offers any of these options before you budget the full amount.

What's included in the price and what costs extra

Most daycare centers include meals and snacks in the tuition, but some do not — ask before you enroll. Diapers and wipes are sometimes included and sometimes charged separately. Many centers charge extra for activities like music classes, field trips, or sports. Some charge registration fees, supply fees, or annual fees on top of tuition.

Most providers charge extra if you pick up your child late. Late fees are typically $1 to $2 per minute and can add up quickly if you are regularly late. Some providers charge extra during school breaks or summer if you need full-time care instead of the usual part-time schedule. Ask for a complete fee schedule before you enroll so you know what the actual monthly cost will be, not just the tuition.

How to compare costs between providers in your area

Start by calling or visiting three to five providers near your home or workplace. Ask each one for their full fee schedule in writing — tuition, registration fees, supply fees, late pickup fees, and what is included. Ask whether they offer discounts for multiple children, payment plans, or flexible scheduling. Write down the hours they operate and whether they are open on the days you need care.

Check your state's child care licensing website to see which providers are licensed and whether they have any violations on record. Licensing records are public and will tell you whether a provider has been cited for safety issues or staffing violations. This information is free and available online in most states.

After you narrow it down, visit each provider in person during operating hours. Watch how staff interact with children, ask about staff turnover, and ask what training staff members have. Ask other parents who use the provider what their experience has been. Cost matters, but a cheaper provider that has high staff turnover or safety violations will cost you more in the long run.

Frequently Asked Questions

Does daycare cost the same year-round?

Most providers charge the same tuition every month, even during weeks when your child is sick or on vacation. Some providers offer a discount if you take a week or two off per year, but most do not. A few providers charge by the day or week instead of by the month, which can save money if you do not need full-time care.

What happens to daycare costs when my child starts school?

Your daycare bill drops significantly once your child enters kindergarten because you only need care before and after school and during school breaks. Before-and-after school care typically costs $5,000 to $12,000 per year. During summer break, you may need full-time care again, which costs more. Some providers offer discounted summer rates for school-age children.

Can I deduct daycare costs on my taxes?

Yes, through the Child and Dependent Care Tax Credit. You can claim a percentage of what you spent on daycare for children under 13, up to $3,000 per child per year. The percentage you can claim depends on your income. You must have earned income and file taxes to use this credit. An employer dependent care account (FSA) also reduces your taxable income and can save you additional money.

Is unlicensed daycare cheaper, and is it safe?

Unlicensed providers typically charge 20 to 40 percent less than licensed providers because they have lower overhead and fewer regulatory requirements. Unlicensed care is not necessarily unsafe, but you have fewer legal protections and no state oversight of training, background checks, or safety standards. Ask an unlicensed provider about their background, training, and insurance before you enroll.

What should I do if daycare costs are too high for my budget?

Look into whether you may have access to for a state child care subsidy based on your income. Many states offer subsidies for families below certain income thresholds. Contact your local child care resource and referral agency (search "child care resource and referral" plus your state name) to learn what programs exist in your area. You can also explore family daycare, which is usually cheaper than centers, or ask your employer about dependent care accounts or subsidies.