The Playbook

Childcare cost comparison

Put in local quotes for each option and see the annual cost, cost per hour, Dependent Care FSA savings, and share of household income, side by side.

Monthly price for one infant, full time (edit with your local quotes)
Federal + state + FICA. 25-35% is common.

Cheapest paid option: In-home family daycare at about $8,550 a year after FSA savings.

  • Family / relative care$2,520/yr
    $300/mo, about $1.54/hour, saves $1,080 with FSA
  • In-home family daycare$8,550/yr
    $900/mo, about $4.62/hour, saves $2,250 with FSA
  • Daycare center$10,950/yr
    $1,100/mo, about $5.64/hour, saves $2,250 with FSA
  • Au pair$19,350/yr
    $1,800/mo, about $9.23/hour, saves $2,250 with FSA
  • Nanny share (2 families)$24,150/yr
    $2,200/mo incl. about $200 employer taxes, about $11.28/hour, saves $2,250 with FSA
  • Full-time nanny$42,630/yr
    $3,740/mo incl. about $340 employer taxes, about $19.18/hour, saves $2,250 with FSA

Nanny and nanny-share rows add 10% as a rough allowance for household employer taxes. Check IRS Publication 926. Family care is rarely free: think gas, groceries and gifts. FSA eligibility requires care so you (and a spouse) can work.

By the Guide to Fatherhood editorial team. Last reviewed .

Checked against guidance from organizations like the AAP, CDC, ACOG and NHS (linked below). This is general information, not medical advice. Read our medical disclaimer.

How to compare childcare fairly

Sticker prices are not comparable. A daycare quote is per child and includes everything; a nanny’s hourly rate does not include your employer taxes, and it covers all your kids. The comparison puts every option into the same units:

  • Monthly cost, including an allowance for employer payroll taxes where you would be the employer.
  • Annual cost after Dependent Care FSA savings, if your employer offers one.
  • Cost per hour of care, based on the hours you enter.
  • Share of household income, if you add your income.

Replace the defaults with the quotes you actually get. The defaults sit inside national ranges; the U.S. Department of Labor found median infant center-care prices from about $7,500 a year in small counties to over $15,000 in very large ones, and your city may be higher.

The options, honestly

Daycare center. Licensed, structured, with backup staff when a teacher is sick. The trade-offs: fixed hours, closures, and the steady stream of colds in the first year.

In-home family daycare. Care in a provider’s home with a small group of children. Often cheaper and more flexible. Check licensing, ratios, and the backup plan for when the provider is sick.

Nanny. One-on-one care in your home, on your schedule. The most expensive option for one child. You become an employer, with taxes and paperwork (IRS Publication 926).

Nanny share. Two families share one nanny and split the cost. Great value if schedules and parenting styles match. Agree in writing on hours, host home, sick policy, and what happens if one family leaves.

Au pair. A young person from abroad who lives with you and provides childcare through a State Department-designated program. Costs include program fees, a weekly stipend, and room and board. Hours are capped by program rules.

Family care. Usually the cheapest in cash and often the most loving. It’s still worth paying for gas and groceries and agreeing on safe-sleep rules, screen time, and backup plans up front.

Tax breaks to check

  • Dependent Care FSA: up to $7,500 per household per year in pre-tax dollars from 2026, if your employer offers it. Even if their plan limit is lower, it is often the single biggest childcare saving.
  • Child and Dependent Care Credit: a federal credit for some care expenses. You cannot use the same dollars for both the FSA and the credit. See IRS Publication 503.

Then plug the winning option into the first-year cost calculator to see the full picture.

Frequently asked questions

What is the cheapest childcare option?

Family care is usually cheapest in cash, followed by in-home family daycare and then centers. A nanny is usually the most expensive for one child, but a nanny share or a nanny for two or more children can come close to center prices per child. Get real local quotes; prices vary hugely by area.

How does a Dependent Care FSA save money?

It lets you pay for eligible childcare with pre-tax dollars through your employer. Starting in 2026 the household limit is $7,500 a year. The savings equal your combined tax rate on the amount you put in. Care must be so you (and your spouse) can work, and the provider must be someone other than your spouse or your child's other parent.

Do I have to pay taxes on a nanny?

Usually, yes. If you pay a household employee above the annual IRS threshold, you are a household employer and generally must withhold and pay Social Security and Medicare taxes, and possibly federal and state unemployment taxes. IRS Publication 926 explains the rules. Our calculator adds 10% as a rough estimate.

When should we start looking for childcare?

Earlier than feels reasonable. Infant spots at popular centers can have long waitlists, so many parents start touring in the second trimester and get on a list before the birth.

Sources

  1. New data: Childcare costs remain an almost prohibitive expense, U.S. Department of Labor, Women's Bureau
  2. Publication 503: Child and Dependent Care Expenses, Internal Revenue Service
  3. Publication 926: Household Employer's Tax Guide, Internal Revenue Service

We link to the original source for every medical and safety claim. Guidance changes; if a source has been updated since our last review, the source wins. How we research.