Childcare is one of the largest fixed costs facing Australian families with young children — and one of the most complex to understand. Fees have risen sharply over recent years, but government subsidies have absorbed much of that increase for most families. In 2026, a significant policy change has also shifted the out-of-pocket picture for many households.
Here is what the publicly available data shows about childcare costs in Australia in 2026.
What the ABS Data Shows About Childcare Costs
The Australian Bureau of Statistics tracks childcare costs as part of its Consumer Price Index. According to the most recent data for February 2026, the childcare CPI index rose 9.1 per cent in the 12 months to February 2026 — one of the highest inflation rates of any major household expense category.
However, this headline figure requires important context. In monthly terms, childcare out-of-pocket costs actually fell 1.6 per cent in February 2026. This reflects the impact of the government’s childcare policy change that took effect from 5 January 2026 — which expanded access to subsidised care for a significant number of families.
The 9.1 per cent annual figure measures the gross cost of childcare fees before subsidies over a 12-month period. When subsidies are accounted for — which is what most families actually experience — the picture is considerably more moderate.
The 3-Day Guarantee — The Biggest Change in 2026
The most significant childcare policy change in recent years took effect from 5 January 2026. The Albanese Government replaced the Child Care Subsidy Activity Test with a guaranteed minimum entitlement, known as the 3-Day Guarantee.
Under this change, all families eligible for the Child Care Subsidy can now access a minimum of 72 hours of subsidised childcare per fortnight — equivalent to three days per week — regardless of their activity levels. Previously, families who did not meet the activity test received fewer subsidised hours.
According to Services Australia , families can still access up to 100 subsidised hours per fortnight if they meet activity requirements — such as paid work, study, or volunteering. First Nations families can access up to 100 subsidised hours per fortnight regardless of activity levels.
For families who previously received 24 or 36 hours of subsidised care per fortnight due to limited activity, this change represents a meaningful increase in government support — and a direct reduction in out-of-pocket costs.
How the Child Care Subsidy Works in 2026
The Child Care Subsidy is the primary federal government mechanism for reducing childcare costs for Australian families. It is paid directly to the childcare provider and passed on as a fee reduction, meaning families pay only the gap between the full fee and the government contribution.
The subsidy rate depends on combined family income. According to the Department of Education’s 2025-26 rate schedule:
Families earning up to $83,000 per year receive the maximum subsidy rate of 90 per cent of the applicable hourly rate cap. The subsidy tapers progressively for higher income families, reaching zero at a combined family income of approximately $533,000 per year.
The CCS hourly rate cap — the maximum fee on which the government calculates the subsidy — is $14.63 per hour for centre-based long day care from July 2025. For outside school hours care, the cap is $12.81 per hour. If a provider charges above the cap, families pay the full difference out of pocket — meaning higher-fee centres in inner city areas of Sydney and Melbourne can significantly increase out-of-pocket costs even for lower-income families receiving high subsidy rates.
For families with more than one child aged five or under in care, a Higher Child Care Subsidy of up to 95 per cent is available for the second and younger children, subject to income thresholds.
What Childcare Actually Costs Australian Families
Gross Fees Before Subsidy
Long day care fees in Australia range from approximately $70 to $188 per day nationally, with the national average approximately $129 per day according to industry data. At the average daily fee of $129 for five days per week, a family faces gross fees of approximately $645 per week — or $33,500 per year — before any subsidy is applied. This illustrates why the subsidy is critical for most families.
Out-of-Pocket Costs After Subsidy
When the Child Care Subsidy is applied, the actual out-of-pocket cost varies significantly by income and care usage. Research from PolicyMod — a microsimulation model based on ABS income and housing data — found the median out-of-pocket childcare cost for Australian families is approximately $2,400 per year. Around one in five childcare families spend less than $650 per year out of pocket, while one in five spend more than $6,900 per year.
The Australian Competition and Consumer Commission found in its childcare inquiry that after government subsidies, out-of-pocket expenses for families using centre-based day care increased 7 per cent over the four years to 2023, despite gross fees rising 20 per cent over the same period. The subsidy system absorbed the majority of the fee increase for most families.
Regional and Socioeconomic Variation
The burden of childcare costs falls unevenly across the income distribution. The ACCC found that about half of households in the lowest income bracket spend between 5 and 21 per cent of their disposable income on childcare, despite receiving a greater government contribution and paying less out of pocket in absolute dollar terms. Half of households in the highest income bracket spend approximately 2 to 9 per cent of their disposable income on childcare.
This counterintuitive finding reflects the fact that lower-income families often have less flexible work arrangements and higher care needs relative to their income, even after subsidies.
Why Childcare Fees Keep Rising
The 9.1 per cent annual rise in gross childcare fees to February 2026 is driven by several structural factors. Higher wages for early childhood educators are the primary driver — labour costs account for approximately 70 per cent of childcare provider operating costs according to the ABS’s Childcare Services Cost Index methodology. As childcare workers have received wage increases through enterprise agreements and government wage initiatives, those costs flow directly into fees charged by providers.
The cost of running a childcare centre has also increased through higher energy costs, insurance premiums, and facility expenses — all of which are rising in the current inflation environment. For more on energy costs, see our electricity prices in 2026.
Where Childcare Costs Stand in 2026
Based on the most recent ABS data and government published figures, gross childcare fees rose 9.1 per cent annually to February 2026 — driven primarily by higher wages for early childhood workers and rising operating costs. However, the 3-Day Guarantee introduced from 5 January 2026 has meaningfully reduced out-of-pocket costs for families who previously received fewer subsidised hours.
For most Australian families, the Child Care Subsidy remains the most important factor in determining actual childcare costs. At maximum subsidy rates, families on lower incomes can access centre-based day care for a fraction of the gross fee. Families whose providers charge above the hourly rate cap of $14.63 per hour bear the full gap between the cap and the actual fee — making provider choice a significant financial decision.
The federal government’s Moneysmart website offers a free childcare cost calculator to help families estimate their out-of-pocket expenses based on income and care hours. For more on how childcare costs fit into the broader household budget picture, see our 5 things getting more expensive in Australia and wages and cost of living.
This article is for general informational purposes only and reflects the author’s own research and understanding of publicly available data. It does not constitute financial advice. Childcare subsidy rates and thresholds are updated annually — always verify current figures directly with Services Australia and the Department of Education.
