The three factors that determine your childcare cost

Child Care Subsidy works by applying three independent rules at the same time. Your income sets your percentage, your activity hours set your cap, and the hourly fee cap sets the base for the calculation. All three interact to produce your weekly out-of-pocket cost.

Step 1 — Income sets your CCS percentage

CCS is calculated as a percentage of the government hourly cap. The percentage is determined by your combined family Adjusted Taxable Income (ATI) — this is not just your taxable salary; it includes reportable fringe benefits, reportable employer super contributions, and total net investment losses. For 2025–26:

• Up to $85,279 combined ATI — 90% CCS rate (maximum)
• $85,279 to $367,563 — tapers from 90% down (higher rate may apply for second and younger children)
• $367,563 to $535,279 — 0% to negative taper; the minimum rate is applied
• Above $535,279 — no CCS entitlement

Step 2 — Activity test sets your fortnightly hours

Your activity test result determines the maximum hours of subsidised care you can access per fortnight. The test looks at the hours each parent spends working, studying, training, or doing other approved activities. From 5 January 2026, all eligible families receive at least 72 hours per fortnight (the 3-Day Guarantee). Families who meet 48 or more combined hours per fortnight can access up to 100 hours.

Step 3 — The hourly cap limits the subsidy base

The CCS percentage is applied to the lower of your provider's actual hourly fee or the government hourly cap. For centre-based day care in 2025–26, the cap is $14.63 per hour. If your provider charges $18/hr, the subsidy is calculated on $14.63 — you pay the full $3.37/hr difference out of pocket on top of your regular gap fee. Providers charging at or below the cap do not create this additional cost.

How your weekly gap fee is calculated

Weekly gap fee = (hourly fee − (CCS% × min(hourly fee, hourly cap))) × hours per week in care. For a family on 75% CCS, with a $14/hr fee and two days (20 hrs) of care per week: subsidy = 75% × $14 × 20 = $210/wk; gap fee = $14 × 20 − $210 = $70/wk. The free CCS calculator on this site does this calculation automatically once you enter your details.

What can change your CCS during the year

CCS can change at any time if: your income estimate changes (update your estimate on myGov); you meet or stop meeting the activity test; your child turns 13 (or 6 for the higher second-child rate); you start or stop receiving FTB; or you change childcare providers. Always update your income estimate promptly to avoid a balancing debt at the end of the financial year.

• Calculate your CCS percentage and weekly cost
• 72 vs 100 hours — how the activity test works
• The hourly fee cap explained
• CCS balancing and end-of-year debts
• What counts as Adjusted Taxable Income for CCS