Daycare, nanny or nanny share: costs and waitlists

The short answer

Full-day childcare for one child cost $6,552 to $15,600 a year in 2022, across the types of care and ages the Department of Labor tracks. That’s 8.9% to 16% of median family income, according to its National Database of Childcare Prices [1]. Prices in your county can sit well outside that range. Child Care Aware of America puts the 2025 national average at $13,184 a year [2]. Infant care usually costs the most.

Join waitlists while you’re pregnant. Then use the tax breaks: a Dependent Care FSA, the Child and Dependent Care Tax Credit, or both. If you hire a nanny, you become an employer, with taxes to match.

Yes, your baby may be on a waitlist before they have a name.

What each option costs

Daycare centers and family child care homes. The National Database of Childcare Prices (NDCP) tracks prices for both, by county, from 2008 to 2022 [1]. Its county fact sheets show what families near you paid [3]. Prices have kept rising since. Child Care Aware found a 23% increase from 2021 to 2025, about the same as overall prices (24%) [4].

A nanny. No federal dataset tracks nanny pay. Here’s what sets the floor:

• A nanny who works in your home is generally covered by federal minimum wage and overtime rules. Overtime applies after 40 hours in a workweek [5].
• A nanny who lives in your home is exempt from federal overtime but must still earn at least the minimum wage [6].
• Your state’s minimum wage may be higher.
• On top of the wage, you pay employer taxes. They’re covered below.

A nanny share. Two families share one nanny and split the cost. Each family usually pays its share of the wage. Each may also have its own employer duties. Ask a tax professional how to set it up before the first payday.

How they compare

There’s no single right answer. A center trades flexibility for reliability. A nanny trades cost for control. A nanny share sits in between, as long as both families stay on the same page.

Join waitlists early

Many centers keep waitlists, especially for infant rooms. Supply is tight: the number of licensed centers fell 1% from 2024 to 2025, the first drop after several years of growth [2]. Some centers charge a fee to join a waitlist.

A plan that works for many families:

1. Start during pregnancy. Find licensed providers through your state’s search at ChildCare.gov [7].
2. Join more than one list. You can turn down a spot. You can’t take one you never asked for.
3. Ask four questions. Is the waitlist fee refundable? When will you confirm a spot? What deposit holds it? Do I pay for holidays and sick days?
4. Check in on a schedule. A short email every few months keeps your name current.
5. Match the start date to your leave. Our guide to paid family leave by state shows how long your paid time lasts.

Tax breaks for childcare

You can use two federal breaks. They share a pool of expenses, so you can’t count the same dollar twice.

Dependent Care FSA. This is an account through your employer. Starting in 2026, you can set aside up to $7,500 a year before tax, or $3,750 if you’re married filing separately [8]. Ask HR whether your employer offers one, and whether the birth lets you enroll or change your election mid-year.

Child and Dependent Care Tax Credit. For 2026, the credit is 20% to 50% of up to $3,000 of care costs for one child under 13. The limit is $6,000 for more than one qualifying person, such as twins. Your percentage depends on your income [8]. The credit can cut your tax bill to zero, but it won’t pay out more than you owe [8].

• FSA money you set aside reduces the costs you can count for the credit. If you put the full $7,500 in an FSA, there’s nothing left for the credit [8].
• You need each provider’s name, address and taxpayer ID number for Form 2441 [8].

Which mix saves more depends on your income and tax bracket. Check with a tax professional.

Hiring a nanny: you’re an employer

If you control what work your nanny does and how they do it, the IRS treats them as your household employee [9]. That brings duties. These are the 2026 rules from IRS Publication 926 [9]:

• Social Security and Medicare. If you pay $3,000 or more in cash wages in 2026, you withhold and pay Social Security and Medicare taxes. Each side pays 6.2% for Social Security and 1.45% for Medicare.
• Federal unemployment tax (FUTA). If you pay $1,000 or more in total cash wages to household employees in any calendar quarter of 2025 or 2026, you owe FUTA tax on the first $7,000 of each employee’s wages.
• Forms. You need an employer identification number (EIN). File Form W-2 with the Social Security Administration by February 1, 2027. File Schedule H with your 2026 federal tax return by April 15, 2027.
• Work eligibility. You and your nanny complete Form I-9. You keep it, and you don’t send it to the IRS.
• State taxes. Contact your state to find out about state unemployment tax and withholding.

Payroll services for household employers can handle the filings for a fee. Either way, talk to a tax professional before the first payday. It’s a lot easier than untangling a year of missed filings later.

This guide explains the rules. It isn’t legal or tax advice. For your situation, check with your HR team, your state agency or a tax professional.

Sources

1. US Department of Labor, Women’s Bureau, “National Database of Childcare Prices,” and news release “Cost of child care for one child can be more than rent in some US counties” (November 19, 2024). dol.gov, dol.gov
2. Child Care Aware of America, “Child Care Prices Rival Major Household Expenses; Supply Fails to Keep Pace with Demand” (May 13, 2026). childcareaware.org
3. US Department of Labor, Women’s Bureau, “Childcare in the counties” (NDCP county fact sheets). public.tableau.com
4. Child Care Aware of America, “Child Care in America: 2025 Price & Supply.” childcareaware.org
5. US Department of Labor, “Fact Sheet: Application of the Fair Labor Standards Act to Domestic Service, Final Rule.” dol.gov
6. US Department of Labor, “Fact Sheet #79B: Live-in Domestic Service Workers Under the FLSA.” dol.gov
7. US Department of Health and Human Services, ChildCare.gov. childcare.gov
8. IRS, “Child and Dependent Care Credit information.” irs.gov
9. IRS, Publication 926 (2026), “Household Employer’s Tax Guide.” irs.gov