What a company-wide child care program really costs
Size a program across your workforce and see the whole picture: total spend, the credits it captures after the annual caps, the net cost to the company, and the value it puts in employees' hands.
Program inputs
2026 figures
Calculation assumes all employees who need care enroll, wherever they work.
Defaults to the lesser of $40,000 and a $1M total budget spread across enrolled employees. Edit to override.
The rate for the structure selected above sets the deduction value. Allowed range 0–60%.
Blended average across the workforce. Employer and employee payroll tax is assumed at 5% (blended above and below the Social Security cap).
Employer net cost after credits—
Value delivered to employees—
Equivalent gross payroll to match—Pre-tax salary employees would need to self-fund the same care.
Enrolled employees
Total child care spend
Federal child care credit
New York state credit
Tax saved on the expense deduction
Employer payroll tax added back
Net cost to employer
Total value of care provided
Tax-free portion
Taxable portion treated as wages
Income + payroll tax on taxable portion
Net benefit to employees
Illustrative only. A simplified model for discussion, not tax, legal, or accounting advice. Federal and New York credits are each capped at $500,000 per taxpayer per year; the model applies those caps and assumes all spend otherwise qualifies. Employee taxes use a blended personal income rate and a 5% blended payroll rate. Actual outcomes depend on plan design, employee demographics, nondiscrimination testing, and each employer's facts. Arluck Consulting is not a law firm, CPA firm, or licensed tax advisor.
Employee-level illustration
What an employer child care dollar is really worth
Put in what an employer spends on one employee's child care, and see three numbers: what it nets the employer after credits, what the employee actually receives, and what that same benefit would have cost in pre-tax salary.
Your inputs
2026 figures
The amount the employer pays toward this one employee's child care. Press Enter or click away to update.
Used to find the household tax bracket.
NYC residents pay city income tax on top of state and federal.
Unsettled question of NY conformity. Conservative is the safe-harbor read; expansive is the upside case.
Sets the value of the expense deduction. NY corporate tax is not modeled.
The rate for the structure selected above sets the deduction value. Allowed range 0–60%.
Provisional 15% fee. Whether the fee itself earns a credit depends on how the arrangement is characterized.
Employer net cost after credits—
Employee net benefit received—
Equivalent pre-tax salary to self-fund—What the employee would need to earn to buy the same care.
For "other state," only federal tax and payroll tax are modeled. State income tax would raise the employee benefit and the self-fund figure, and there is no equivalent of the New York state credit.
Child care spend
Federal child care credit
New York state credit
Tax saved on the expense deduction
Employer payroll tax added back
Arluck advisory fee 15% of spend
Credit on fee
Tax saved on fee deduction
Net cost to employer
Value of care provided
Tax-free portion
Taxable portion
Income + payroll tax on taxable portion
Net benefit to employee
Illustrative only. These figures are a simplified model for discussion, not tax, legal, or accounting advice. They assume the spend fully qualifies for the federal child care credit, all employee income is W-2 wages with the standard deduction, and no other deferrals or unusual circumstances. The New York credit treatment is an open legal question and is shown as a range via the assumptions above. Actual outcomes depend on plan design, employee demographics, nondiscrimination testing, and applicable caps. Arluck Consulting is not a law firm, CPA firm, or licensed tax advisor.