The Child Care Subsidy (CCS)
The Child Care Subsidy reduces the cost of approved childcare for Australian families, paid directly to providers to lower your fees. How much you get depends on your family income, your activity level, and how many children you have in care.
- The rate: the subsidy starts at 90% for families earning up to about $83,280, reducing as income rises and cutting out at about $533,280.
- The activity test: the hours of subsidised care you can get depend on the hours of recognised activity (work, study, volunteering) of the lower-earning parent.
- The extras: a higher rate applies to a second and younger child in care, and an hourly fee cap limits the fee the subsidy is calculated on.
01 How much CCS you get
The Child Care Subsidy is a percentage of your childcare fees, paid directly to your provider so your out-of-pocket cost is lower. The percentage is set by your combined family income: families earning up to about $83,280 (2024-25) get the maximum 90%, and the rate reduces by 1 percentage point for every $5,000 of income above that, reaching zero at about $533,280. The calculator estimates your rate from family income. The subsidy is calculated on the lower of your actual fee or an hourly fee cap, so very high-fee services aren't fully subsidised.
Shows: your Child Care Subsidy percentage for one child, by family income (2024-25 tapers). Ignores: the higher rate for a second and younger child, the hourly fee cap, the activity test, and indexation of thresholds.
The subsidy percentage is commonly read as what the government pays, and it is not quite that. It applies to the lower of your provider's fee and an hourly rate cap, so a centre charging above the cap leaves a gap the subsidy never touches — which is why two families with the same income and the same stated subsidy percentage can face very different out-of-pocket costs.
On the defaults above, the worked example shows: The subsidy starts at 90% under $83,280 and drops 1% per $5,000 of income, to nil at $533,280.
Source: Services Australia — How much Child Care Subsidy you can get
02 The activity test and the second-child rate
Two rules shape what you actually receive, and both are easy to fall foul of.
The activity test links the hours of subsidised care to the recognised activity — paid work, study, training, volunteering, or actively looking for work — of the parent with the lower hours. More activity unlocks more subsidised hours, in bands, and a household where one parent has very few recognised hours is capped regardless of what the other does.
The second-child rate substantially increases the subsidy for younger children in families with more than one child in care, recognising that two sets of fees is where household budgets break. The higher rate applies to the younger child or children, with the eldest receiving the standard rate.
Two practical points. The subsidy is paid directly to your provider, and a portion is withheld until your income is reconciled after the end of the financial year — so an income estimate that turns out too low produces a debt rather than a surprise. And it is worth updating that estimate through the year when income changes, rather than leaving the reconciliation to correct it.
Source: Services Australia — Activity test for Child Care Subsidy
03 Why it matters for work and super
The CCS isn't a retirement program, but it shapes retirement indirectly. By reducing the net cost of childcare, it changes the maths of returning to work after having children — and returning to work, even part-time, restarts super contributions and reduces the parental-leave super gap. For a family weighing whether a second income covers childcare, the subsidy can be the difference that makes returning worthwhile, which in turn keeps super growing. It's worth estimating your CCS rate when planning a return to work, alongside the super tools that help close the gap.
I cover the Child Care Subsidy because it's a hidden lever on retirement, not just a household-budget line. The decision to return to work after kids often hinges on whether the second income clears childcare costs — and the CCS is what tips that calculation. Return to work, even part-time, and super contributions restart during the exact years the parental-leave gap does the most damage. So estimate your CCS rate as part of the back-to-work decision; it's quietly a super decision too.
FAQ
How much is the Child Care Subsidy?
Up to 90% of your childcare fees for families earning up to about $83,280 (2024-25), reducing by 1 percentage point per $5,000 of income above that, to nil at about $533,280.
What is the activity test for CCS?
It links your subsidised care hours to the hours of recognised activity — work, study, training, volunteering or job-seeking — of the parent with the lower activity. More activity means more subsidised hours.
Is there a higher rate for a second child?
Yes — families with more than one child aged 5 or under in care receive a higher subsidy for the second and younger children, on top of the standard rate.
Sources
Regulator references
- Services Australia — How much Child Care Subsidy you can getHow the Child Care Subsidy percentage is calculated from family income.Last verified: 2026-06-19
- Services Australia — Child Care SubsidyThe Child Care Subsidy: eligibility, and how the rate is set.Last verified: 2026-06-19
- Services AustraliaThe activity test, which sets the hours of subsidised care a family can claim.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-06-19 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.