How Much Daycare Costs and How to Pay For It
Key takeaways
Childcare can be one of the biggest new expenses for families, but don’t feel overwhelmed.
The cost of daycare varies widely based on your location, your child’s age, and the type of care you choose.
Understanding what drives those costs—and what options are available including tax breaks—can help you plan in a way that fits your family.
If you’re planning for childcare—or already facing that decision—you’ve probably had a moment where the numbers made you pause.
For a middle-income family, childcare accounts for 16 percent of total child-rearing costs, according to the Department of Agriculture. That’s on top of expenses related to pregnancy, childbirth, and parental leave. And if you have more than one child, you might be feeling the pinch even more.
It’s also not just about money, but figuring out what works for your child, your schedule, and your overall financial picture at the same time.
The good news is that while childcare costs can vary widely, understanding what drives those costs—and how they fit into your broader plan—can make the decision feel more manageable.
Let’s explore what daycare typically costs, what factors influence the price, and a few ways families approach planning for it—so you can feel more prepared for what’s ahead.
The average cost of daycare
Daycare costs can vary widely based on where you live, what type of care you’re getting, how many kids you have, and how old they are. The average weekly cost of daycare for a single infant is $332, according to Care.com. For a toddler, that number drops to $308 (or $585 for two toddlers).
Most people choose either a childcare center or an in-home arrangement for their childcare needs. A childcare center is typically certified and meets certain state or federal regulations around class sizes, sanitary procedures, and record keeping. In-home arrangements may or may not be certified and typically are less expensive because they’re run out of a home by one provider vs. in a center with multiple childcare professionals.
According to the most recent numbers from the Department of Labor, the median yearly price of center-based care in 2024 looked like this:
- Infants: $34,982
- Toddlers: $29,987
- Preschool: $28,621
Below were the median annual prices for home-based care in 2024, according to the Department of Labor.
- Infants: $23,511
- Toddlers: $22,678
- Preschool: $23,623
Why is daycare so expensive?
There are several moving parts that affect the cost of daycare. Understanding each one can give you a better sense of what goes into the financial commitment.
Type of care
Whether you opt for a daycare center or a home-based option, the level of care you need will directly impact your costs. More individualized care typically comes at a higher price. For example, let’s say you have a 12-week-old infant, and you’re about to go back to work. Care.com puts the average weekly cost of a nanny at $870 and a childcare center at $332. A nanny provides some level of convenience coming to your home and caring for your child one-on-one, whereas with a childcare center, you’ll have to transport your child, and they’ll be among other children the center is caring for.
You can also expect to pay more if you enroll in full-day versus half-day care. If your child has any special needs or needs accommodations, that could increase your total spend as well.
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Where you live
Daycare generally costs more in areas that have a higher cost of living due to higher costs for the facility to operate: rent, taxes, employee wages and other expenses. Local regulatory laws may also increase costs. And if a daycare center is conveniently located in a great part of town, that could bump up the price as well.
For example, according to the Department of Labor data mentioned earlier, the median yearly price for an infant enrolled in center-based care in Santa Clara County, California, in 2024 was $30,399. But the cost was only $7,151 in Taylor County, Texas.
Caregiver-to-child ratios
State laws require daycare providers to maintain a minimum caregiver-to-child ratio. For example, for infants who are under a year old, some states require one licensed caregiver for every four children. Even so, some daycare providers might go above and beyond by offering even more individualized care. The main takeaway: A lower caregiver-to-child ratio will likely translate to a higher bill.
Legal and insurance expenses
Opening and maintaining a daycare center requires licensing and insurance. That may include liability insurance, property insurance, workers’ compensation and more. This can create a big expense for providers, and they may pass on those costs in the form of higher fees. Your state requirements will likely be a main factor here.
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Let’s get startedHow to afford childcare more easily
These are your kids we’re talking about. Though childcare can come with a hefty price tag, you want to make sure you have an arrangement that you’re comfortable with. But there may also be ways to find savings. Consider the following tips:
Make the most of tax breaks for parents
Having a child opens up your eligibility for certain tax perks. That often includes the child tax credit, which offers up to $2,000 per qualifying child in 2025. Beyond that, the child and dependent care tax credit could equal 20 to 30 percent of your eligible childcare costs (limits apply).
Adjust your budget
Look for ways to free up cash within your monthly budget. That might involve canceling subscription services or taking up meal planning—or more drastic changes, like moving to a less expensive home. Many families find that the cost of childcare can outweigh the amount they’re bringing home from their job, and one spouse may decide to stop working until the kids are older. If you’re comfortable with the idea, you could also consider a less expensive form of childcare, such as nanny-sharing with another family or enrolling in home-based care.
Maximize your employer benefits
If your employer offers a Dependent Care FSA (flexible spending account), you may be able to contribute pretax dollars toward your childcare expenses, reducing your taxable income and allowing you to save on taxes. Find out how much you’re able to contribute and compare that with your annual childcare bill to determine how much to contribute.
Work with a financial advisor
Childcare is one of those expenses that can feel big—because it is.
But it’s also one that many families navigate step by step, adjusting along the way as their needs, schedules, and priorities change.
You don’t have to have every detail figured out right away. What matters most is understanding what to expect, making a plan that fits your situation today, and giving yourself the flexibility to adapt as things evolve.
Whether that means exploring different care options, adjusting your budget, or looking into available tax benefits, each step you take helps you build more clarity and confidence.
Because planning for childcare isn’t just about covering a cost—it’s about creating a setup that supports your family and the life you’re building together. Your Northwestern Mutual financial advisor can help
This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.
