What this calculator does
Working parents can lower their taxes on child care in two ways: by paying for care through a Dependent Care FSA (flexible spending account) at work, or by claiming the Child and Dependent Care Credit on their tax return. Enter your filing status, wages, number of children in care, care costs and your state tax rate. The calculator works out the 2026 tax savings of each choice and of the best mix, so you can decide how much to put in the FSA during open enrollment.
The 2026 rules
- Dependent Care FSA: from 2026, up to $7,500 a year ($3,750 if married filing separately) can be excluded from your pay, if your employer's plan has been updated to allow it; the money skips federal income tax and Social Security and Medicare taxes, and usually state tax. The amount can never be more than your earned income, or your spouse's if lower (IRS Publication 15-B).
- Child and Dependent Care Credit: a percentage of up to $3,000 of care costs for one qualifying person, or $6,000 for two or more. For 2026 the percentage is 50% for income up to $15,000, then drops 1 point for each $2,000 to 35%; above $75,000 ($150,000 married filing jointly) it drops 1 point for each further $2,000 ($4,000 jointly) to a floor of 20%. The credit cannot be more than your federal income tax (IRS).
- No double benefit: money paid through the FSA is subtracted from the $3,000 or $6,000 limit for the credit.
How it is worked out
For each FSA amount, the calculator figures your federal income tax with the 2026 brackets and standard deduction, subtracts the care credit on the costs that are left, and adds the Social Security and Medicare tax (7.65%) and the state tax you do not pay on the FSA money. Savings are compared with claiming nothing. Example: a married couple filing jointly with $90,000 of wages, one child and $12,000 of care costs saves about $1,050 with the credit alone (35% of $3,000), or about $1,849 by putting $7,500 in the FSA: $900 of federal income tax, $574 of Social Security and Medicare and $375 of state tax at 5%.
Frequently asked questions
Is a Dependent Care FSA better than the child care credit?
Often for middle and higher incomes, because the FSA also saves Social Security, Medicare and state tax, and its limit is higher. At low incomes the credit's higher percentage can be worth more, and a mix can be best. The calculator compares both.
Can I use both?
Yes, but FSA money reduces the care costs that count for the credit. With one child and $3,000 or more in the FSA, or two children and $6,000 or more, there is no credit left.
Is the 2026 FSA limit really $7,500?
The law raised the maximum to $7,500 starting in 2026, but each employer decides whether its plan allows the higher amount. Ask your benefits office.
What care costs count?
Care for a child under 13 (or a dependent who cannot care for themselves) so that you, and your spouse if married, can work or look for work, such as day care, after-school care and day camp. Overnight camp and school tuition from kindergarten up do not count.