Childcare costs puts family budgets and jobs at risk

Childcare has become one of the largest expenses families in the United States face, forcing some parents to reduce their working hours, leave the workforce entirely, or find other care for their children while they’re working. 

The national average annual cost of childcare reached about $13,184 in 2025, according to Child Care Aware of America. That represented about 10% of the median income of a two-parent household and 33% of the median income of a single-parent household. 

The expense can rival other major household bills. In every state with available data, center-based care for two children cost more than the median rent in 2025. In most states, it also exceeded mortgage payments, according to Child Care Aware. For families who have infants, that care can cost more than in-state public college tuition. 

Such high costs can leave families with less money for food, housing, healthcare, transportation and other necessities. A Brookings Institution analysis found that childcare costs pushed more than 4 million families with children 12 and younger into financial instability in 2024.

Affordability is also shaping whether parents can remain in the workforce. A survey by BabyCenter, a digital parenting resource, found that 13% of mothers had left the workforce because of rising childcare costs, while 45% were considering leaving their jobs or reducing their hours. 

Finding an available slot at a childcare facility can be another obstacle. The number of licensed care centers fell by 1% from 2024 to 2025 while the number of family childcare homes grew by 1.4%. 

The financial pressures of paying for childcare are only getting worse. On July 13, a new rule published by the U.S. Department of Health and Human Services rescinded a requirement that states cap co-pays for families receiving childcare assistance at 7% of their incomes. The rule also rescinded requirements that states provide some services through grants or contracts, pay providers before care is delivered, and base payments on enrollment rather than attendance. The Trump administration said rescinding the requirements would reduce costs for states and territories.

The cap on co-payments had been among policies instituted under the Biden administration for the operation of HHS’ Child Care and Development Fund Program, which sends federal money to states to subsidize care for families with low incomes while parents work, attend school, or participate in job training. 

The HHS rule removes national requirements and gives states more responsibility for balancing families’ costs, access to care, and payments to providers. States that choose to maintain the former protections have to figure out how to support them with limited federal funding or to provide additional state money.

Other federal support remains in place, including child and dependent care tax credits and incentives for employers that provide care. However, they don’t limit the prices providers can charge or guarantee families an affordable childcare slot. 

Research by Brookings shows that broader childcare subsidies based on a sliding scale could help 3.7 million more families afford basic necessities and allow an additional 1.3 million parents of young children to enter the workforce.