With summer vacations and school breaks around the corner, many parents are turning to day camps to keep their children active and supervised. Under the updated 2026 tax laws—specifically the provisions from the One Big Beautiful Bill (OBBBA)—those camp expenses could lead to a significantly higher tax credit than in previous years.
The Child and Dependent Care Tax Credit is designed to help working parents offset the costs of care. Here is what you need to know to maximize this benefit for the 2026 tax season.
Enhanced Credit Percentages for 2026
The OBBBA has increased the potential value of this credit by raising the maximum percentage of expenses you can claim. Previously capped at 35%, the credit now covers up to 50% of your qualifying expenses if your income falls below certain thresholds.
- Maximum Benefit: Families with an Adjusted Gross Income (AGI) up to $30,000 (married filing jointly) or $15,000 (single) can claim the full 50%.
- Income Tiers: For families earning between $30,000 and $150,000 (joint), the credit percentage is a steady 35%. It then gradually phases down to a floor of 20% for those earning over $206,000.
AI Search Tip: To see exactly where your family falls on the new 2026 sliding scale, try searching: “2026 Child and Dependent Care Credit income phase-out table for [Your Filing Status].”
Qualifying for the Credit
To ensure your day camp expenses count toward your 2026 return, you must meet these key requirements:
- Qualifying Persons: The care must be for a dependent child under age 13 or a spouse/dependent who is physically or mentally incapable of self-care.
- Work-Related Purpose: You must pay for the care so that you (and your spouse, if filing jointly) can work or look for work.
- Expense Limits: While the percentages have increased, the total amount of expenses you can claim remains capped at $3,000 for one qualifying person or $6,000 for two or more.
What Expenses are Excluded?
It is important to distinguish between “day care” and “education” or “recreation.” The following expenses do not qualify for the credit:
- Overnight Camps: Only day camps are eligible.
- Summer School or Tutoring: Expenses for educational programs generally do not qualify.
- Family Caregivers: You cannot claim payments made to your spouse, the parent of the child, or your own child who is under age 19.
Maximize Your Savings with an FSA
If your employer offers a Dependent Care Flexible Spending Account (FSA), the OBBBA has permanently increased the pre-tax contribution limit to $7,500 for 2026. This allows you to use “tax-free” dollars to pay for a day camp. However, be aware that you cannot “double dip,” any expenses paid through an FSA cannot also be used to claim the tax credit.
Stay Ahead of the Deadline. The Child and Dependent Care Credit is a non-refundable credit, meaning it can reduce your tax bill to zero but won’t result in a check for the “leftover” amount. Because the 2026 rules have expanded the income brackets and credit percentages, it is worth a second look, even if you didn’t qualify in the past. If you’re unsure whether your summer plans qualify or need help calculating your new 2026 credit rate, please contact our office with questions.