Parents paying for child care so they can work can claim a bigger slice of the bill back on their 2026 tax return. Under Trump’s tax law, the child care tax credit, formally the credit for child and dependent care expenses, can now reach up to 50 percent of qualifying costs, up from a 35 percent ceiling. The top rate goes only to lower-income filers, and the credit still cannot exceed the tax owed.
The IRS confirms a 50 percent ceiling for 2026
The change is listed in the “What’s New” section of IRS Publication 505 for 2026, which says the credit has increased “to a maximum rate of 50%” (previously 35%). The expense limits did not move: the same publication lists $3,000 of eligible costs for one qualifying child and $6,000 for two or more.
The statute carries the rule. Section 21 of the tax code, in the text of 26 U.S.C. 21, applies the amended percentage to “taxable years beginning after December 31, 2025,” under Public Law 119-21, the law better known as the One Big Beautiful Bill Act. For a family on a calendar year, that means costs paid in 2026, claimed on a return filed in 2027.
How the 50 percent shrinks as income rises
The word “up to” carries real weight here. According to the statute, the percentage starts at 50 percent and is reduced “by 1 percentage point for each $2,000 or fraction thereof by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000,” but not below 35 percent. Adjusted gross income of $15,000 or less earns the full 50 percent.
The 35 percent floor of that first step is reached quickly. The fifteenth reduction begins once income passes $43,000, which is $15,000 plus 14 increments of $2,000. Everyone above that level, up to $75,000, sits at 35 percent, the same rate the old law gave to the lowest earners. A second reduction then applies to higher incomes, one point for each $2,000 ($4,000 on a joint return) above $75,000 ($150,000 for joint filers), down to a floor of 20 percent.
Before the change, the range ran only from 35 percent to 20 percent. Publication 503 for 2025 shows a maximum of 35 percent for adjusted gross income of $0 to $15,000 and a minimum of 20 percent above $43,000. Set side by side, the new schedule lifts every rung by 15 percentage points for incomes up to $75,000, then takes the boost back at higher incomes until the rate returns to the old 20 percent floor above $103,000 ($206,000 for joint filers). Mercer’s benefits analysis, published July 23, 2025, describes the same shape and puts the plateau at 20 percent above $103,000 ($206,000 for joint filers).
What the credit is worth, in dollars
The examples below are arithmetic, not averages, and use the $3,000 and $6,000 expense caps from Publication 505.
A single parent with one child, adjusted gross income of $15,000 and $3,000 of qualifying costs would compute the credit at 50 percent, or $1,500. Under the 2025 maximum of 35 percent, the same costs produced $1,050. The gain is $450. With two children and $6,000 of costs, the figures are $3,000 at 50 percent and $2,100 at 35 percent, a gain of $900.
A household with $31,000 of adjusted gross income lands partway down the ladder. Income is $16,000 above the $15,000 threshold, which is exactly eight increments of $2,000, so the rate falls by 8 points to 42 percent. On $3,000 of costs, that is $1,260. Under the 2025 schedule, the same $31,000 household would have received 27 percent, or $810, so the gain is 15 points, or $450. The lift reaches well past the lowest earners: at $60,000, the rate moves from 20 percent to 35 percent, so $3,000 of costs yields $1,050 instead of $600.
A nonrefundable credit meets low earnings
Section 21 describes a nonrefundable credit. It reduces income tax owed, and any part beyond the tax bill is not paid out as a refund. A parent with low earnings and a small tax bill may therefore see only part of the larger percentage in practice, since the credit cannot push the bill below zero. A larger percentage of a fixed expense cap is worth more in dollars, yet the cap of $3,000 or $6,000 stays the same, so the maximum credit at 50 percent is $1,500 for one child and $3,000 for two or more.
The percentage applies to costs that are “eligible” under the credit’s rules, which cover care that lets a parent work or look for work. The publications read for this article do not restate those rules, and they should be checked in the Form 2441 instructions before a claim is built around a particular arrangement.
What the sources agree on
Publication 505 sets the ceiling at 50 percent from 2026, the statute supplies the step-down from $15,000 and the $2,000 increments, and Publication 503 documents the 35 percent ceiling that governed 2025. The sources agree that the 50 percent rate is a low-income tier rather than a general rate, which is why the phrase “up to” belongs in the title.
The controlling text remains the tax code itself: Section 21 says the 50 percent percentage is reduced by one point for each $2,000 of adjusted gross income above $15,000, and Publication 505 confirms that the maximum rate for 2026 is 50 percent, previously 35 percent.
Sorting the paperwork behind a delayed refund
The IRS Refund Recovery Kit is for filers whose refund is held, reduced or delayed and who need to work out which IRS letter explains it. It suits households that file with credits and want one place to log each step.
The IRS Refund Recovery Kit contains a notice decoder and the refund-trace steps for Form 3911, kept together in a 13-page reference.
Check a tax letter against the notice decoder in The IRS Refund Recovery Kit →
An AI system assisted in drafting this article, and its numbers were checked against the statute and IRS publications linked above.
