How the Child Care Subsidy is calculated in Australia
The Child Care Subsidy (CCS) is the main government payment that reduces Australian families' childcare costs. This guide explains exactly how it works — from your income taper to the hourly cap — and how to estimate what you'll actually pay.
What is the Child Care Subsidy?
The Child Care Subsidy (CCS) is an Australian Government payment that helps eligible families with the cost of approved early childhood education and care — including long day care, family day care, outside school hours care (OSHC), and in home care.
The subsidy is paid directly to your child care provider, not to you. You pay the gap fee — the difference between what your provider charges and what the government contributes. Your job is to estimate that gap fee so you can budget accurately.
CCS replaced the old Child Care Benefit and Child Care Rebate in 2018. Since then it has been updated annually for CPI, and in January 2026 the activity test was replaced with the 3 Day Guarantee.
The three factors that determine your costs
Three things combine to produce your weekly childcare gap fee:
Step 1 — Your CCS percentage (income taper)
Your subsidy percentage is based on your combined family Adjusted Taxable Income (ATI). ATI includes wages, investment income, fringe benefits, and any other taxable income for all adults in your household.
You provide Services Australia with an income estimate at the start of the financial year. At year end, this is reconciled against your actual ATO tax return. If you earned more than estimated, you may have a debt.
| Combined family income (ATI) | CCS percentage |
|---|---|
| $0 – $85,279 | 90% (maximum) |
| $85,280 – $535,278 | Reduces by 1% per $5,000 above $85,279 |
| $535,279+ | 0% — no CCS |
2025–26 rates, effective 7 July 2025. Indexed by CPI each year.
Step 2 — Your subsidised hours per fortnight
The government only subsidises a certain number of care hours per fortnight. Hours above this limit are charged at your centre's full rate with no subsidy at all.
| Circumstance | Subsidised hours / fortnight |
|---|---|
| All CCS-eligible families (3 Day Guarantee, from 5 Jan 2026) | 72 hours minimum |
| Both parents each exceed 48 hrs/fn recognised activity, or valid exemption | 100 hours |
| Aboriginal or Torres Strait Islander children (voluntary self-ID) | 100 hours |
| Any ACCS type (TTW, TFH, GP, CW) | 100 hours |
For partnered families, the lower of the two parents' recognised activity hours determines the subsidised hours. Both must exceed 48 hours to unlock 100 hours per fortnight.
See the full guide on the 3 Day Guarantee and activity hours.
Step 3 — The hourly rate cap
Regardless of what your centre charges, the government will only subsidise up to the hourly rate cap for your care type. If your centre charges more than the cap, you pay the full gap above it — with no subsidy applied to that excess.
| Care type | Child age | Hourly cap (2025–26) |
|---|---|---|
| Long Day Care (CBDC) | Pre-school (under ~5) | $14.63/hr |
| CBDC / OSHC | School age (~5+) | $12.81/hr |
| Family Day Care (FDC) | All ages | $13.56/hr |
| In Home Care (IHC) | All ages (per family) | $39.80/hr |
Caps are indexed by CPI each July. See the full 2025–26 hourly caps guide.
How your gap fee is calculated
Putting all three steps together, the calculation runs like this:
What is withholding?
Services Australia withholds a percentage of your CCS — by default, 5% — as a buffer against year-end debts. At the end of the financial year, your actual income (from your ATO tax return) is compared to your estimate. If you earned more than expected, you may have received too much CCS. The withheld amount partially offsets this risk.
You can change your withholding rate in your Centrelink online account via myGov. A higher rate means less money in your pocket fortnight-to-fortnight, but less risk of a year-end debt if your income rises. Withholding does not apply to ACCS payments.