Working parent paying for childcare? Your employer may offer a dependent care flexible spending account (DCFSA), but for some families, that could end up costing you more than you save. Use this calculator to predict whether it's better to use a DCFSA or take the separate Child and Dependent Care Tax Credit.
Assumes a joint return. Married filing separately isn't supported here; its FSA cap is $3,750 and the credit is generally unavailable.
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You and your spouse combined.
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The paycheck the FSA would come out of.
Drives the child tax credit and EITC, which share the math with the care credit.
Married filing jointly: virtually always yes. Unmarried parents: depends on primary custody and any agreement about who claims the kids. Unchecking removes only the child tax credit; the EITC and the care credit follow where the kids live and can't be traded to the other parent.
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Day care, preschool, after-school care, summer day camp, a nanny while you work. Not overnight camp, not kindergarten tuition.
New York mode uses 2026 NYS brackets (NYC adds city tax) and the statutory state credit: 110% of the federal credit at low incomes, sliding to 20% above $65,000. The state credit is refundable and computed before the federal liability cap. Assumes the 2026 state form follows the new federal schedule; it isn't published yet.
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0 in no-income-tax states.
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Some states pay their own dependent care credit as a share of the federal one.
The answer
Best strategy
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Where the answer flips: benefit vs. household income
Max the FSA Skip the FSA, take the credit
Curves hold your family's other inputs fixed and sweep income (wages scaled proportionally). The dashed marker is your household.
Keep your numbers
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Run a dependent care FSA? The upgraded child care credit gives many mid-income employees a reason to stop contributing, and your plan's 55% fairness test leans on exactly their participation. Stress-test the plan, price the fix, and see what employer-funded care costs after the federal credit.
Everyone the plan covers who is not highly compensated (2026: generally over $160,000 of prior-year pay). Count them all, kids or no kids: the test averages over every covered employee, not just parents, which is a big part of why it's hard.
A salary-reduction plan may disregard them in the test.
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The share of current non-highly-compensated participants for whom the upgraded credit beats the FSA, and who therefore stop electing. It depends on your pay mix and their families: the credit tends to win around $70K-$135K of household income with two or more kids in care, and over a narrower band for one-kid families. Run typical cases in the family tab, then set this.
The employer-funded alternative
Used for the deduction side of the math.
Roughly, average annual gross receipts of $31M or less over five years.
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Paid to licensed providers under contract. Employer contributions to FSA-style accounts don't earn the credit.
The 55% average benefits test
Today——
After credit-driven departures——
What a dollar of benefit costs you
A raise costs payroll tax and delivers post-tax dollars. Seeding FSA accounts is deductible but earns no credit. Paying licensed providers under contract earns the federal employer child care credit at 40% (50% for smaller companies), which is what changes the arithmetic.
Your employer-funded program, after the federal credit
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This test, on your real numbers
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