Child Care Subsidy Calculator

Understanding child care subsidys in Australia

How the subsidy reaches you

The Child Care Subsidy (CCS) is paid by Services Australia directly to your childcare provider, so it appears as a discount on your invoice rather than a payment that lands in your bank account. What you actually pay the centre is the fee minus your CCS percentage. Three things set that percentage and how many hours it applies to: your combined family income, the activity test, and how many young children you have in care. Because the subsidy is netted off the fee at the source, the only number you see at the till is your gap, which makes it easy to miss how much each of these levers is moving. The starting point is income, which sets your percentage rate.

Income sets your percentage

Your CCS percentage is driven by your estimated combined family income for the year. Families earning up to the lower income threshold (around $83,000 to $85,000, indexed upward each year, so confirm the current 2026 to 2027 figure with Services Australia) receive the maximum 90% subsidy. Above that threshold the rate tapers by 1 percentage point for every $5,000 of additional income, so the subsidy slides gradually rather than dropping off a cliff. A family on a middle income often lands somewhere in the 60% to 80% band. The taper continues until the subsidy phases out entirely once combined income passes roughly $530,000 to $535,000. Because the rate is based on your income estimate, keeping that estimate accurate during the year matters, as an under-estimate can leave you owing money at reconciliation.

The activity test sets your hours

Income decides the percentage, but the activity test decides how many hours per fortnight that percentage applies to, and the two are independent. The test looks at the recognised activity (paid work, self-employment, study, training, paid or unpaid work experience, volunteering or actively looking for work) of the parent with the lower activity hours. More activity unlocks more subsidised hours: more than 48 hours of activity a fortnight unlocks up to 100 subsidised hours, 16 to 48 hours unlocks up to 72, 8 to under 16 hours unlocks up to 36, and under 8 hours generally limits you to up to 24 subsidised hours a fortnight. Low-income families (broadly those earning under about $83,000) can still access up to 36 subsidised hours even with low activity. Hours beyond your entitlement are charged at the full unsubsidised fee.

The higher rate for younger siblings, and withholding

Families with more than one child aged 5 or under in care get a higher CCS rate for the second and each younger child, up to around 95%, while the eldest child in care stays on the standard income-tested rate. This higher rate applies automatically once Services Australia has identified your eldest CCS child and your younger ones from your details, so you do not need to nominate which child is which. One more mechanic catches families out at tax time: Services Australia withholds 5% of your subsidy through the year as a buffer against income-estimate errors, so your in-year gap is slightly larger than your headline rate implies, and the withheld amount is squared up after the financial year when your actual income is confirmed.

Keeping your estimate right and reconciliation

Because CCS is paid through the year on an estimate of your family income and then reconciled against your actual income after the financial year, the accuracy of that estimate is the single thing most within your control. If you underestimate your income (for example because a partner picks up extra work or a bonus), you will have been overpaid subsidy and may owe money back at reconciliation, partly cushioned by the 5% withholding. If you overestimate, you may receive a top-up. The fix is to update your income estimate in your Centrelink online account whenever your circumstances change, rather than setting it once at enrolment and forgetting it. It also pays to lodge your tax return (and your partner’s) promptly, because Services Australia cannot reconcile and release any withheld or owed amount until both returns are in, and unreconciled families can have CCS paused. For the centre, reminding families to keep estimates current and lodge on time reduces the debt-recovery friction that sours the parent relationship. Treat the rate shown here as an indicative guide to where you sit; your exact entitlement is calculated by Services Australia from your income estimate and activity and reconciled after year-end.