By Aliss Higham
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A new national analysis suggests that for most American families, child care costs far more than what federal guidelines consider affordable—leaving many parents to devote a significant share of their income to stay in the workforce.
The report, from Diversity Data Kids, examines how child care costs stack up against family income for full-time working parents with children under 14. Drawing on data from the Current Population Survey and child care price figures from the Department of Labor, researchers compared median child care prices—both center-based and home-based—to family earnings.
Federal guidelines, set by the Department of Health and Human Services, defines child care as affordable when it takes up no more than 7 percent of a household's income.
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In reality, few families meet that standard. For center-based care, the 7 percent benchmark is achieved in three states. Depending on where a family lives, the median cost of center-based care ranges from 6 percent of income in Hawaii to 17 percent in Vermont. In five states—Vermont, Minnesota, Nevada, Wisconsin and Montana—the typical working parent would need to spend at least 14 percent, double the benchmark, of their income on center-based care.
Low-Income Families
In 31 states, low-income working parents would have to spend more than 30 percent of their income on center-based care. In Vermont and New Hampshire, that share climbs above 50 percent, meaning child care alone could consume more than half of a low-income family's earnings.
Home-based care is generally less expensive, but it's still out of reach for many. In 46 states, even the median price of family or home-based care exceeds the 7 percent affordability benchmark.
The report noted that child care was not optional for most families. Three-quarters of working parents with at least one child under 14 are employed full time year-round. Yet despite this widespread need, prices often outpace what many families can reasonably afford.
Overall, 68 percent of working parents would spend more than the 7 percent benchmark on center-based care, while 63 percent would exceed it for home-based care. Among low-income parents, 99 percent would pay more than the federal affordability threshold. Even among higher-income families, more than half would still surpass the 7 percent mark.
A separate study by LendingTree found child care costs are outpacing earnings even for families bringing in more than the typical income. With the average yearly price of caring for an infant and a 4-year-old now at $28,190, most households fall well short of what is needed for care to be deemed affordable under federal guidelines.
According to LendingTree, a family with two children would need an annual income of $402,708 to keep child care expenses within the recommended limit. In contrast, the average income for a two-child household stands at $145,656—meaning families would need to earn 176.5 percent more than they currently do to meet the federal affordability benchmark.
Race and Immigration Status
While high costs affect families across the board, the report finds that some groups face steeper barriers.
Among Black parents working full time and year-round, 73 percent would spend more than 7 percent of their income on center-based care. For Hispanic parents, that figure rises to 81 percent, the report found. Although white and Asian parents are somewhat more likely to fall below the threshold, more than half in both groups would still pay more than the federal standard.
Immigrant parents—who are more likely to have lower incomes—also encounter substantial challenges. Seventy-one percent would exceed the affordability benchmark for center-based care, and 66 percent would do so for home-based care. Similar patterns appear across racial and ethnic groups when looking at family child care settings.
Free Child Care
For most families across the U.S., child care remains a significant expense. However, some states and cities are beginning to move toward eliminating or mitigating the cost.
As of November 2025, families in New Mexico are no longer subject to income limits or co-payments to qualify for child care assistance. The policy makes the state the first in the nation to offer child care at no cost to all households, regardless of how much they earn.
In New York City, Democratic Mayor Zohran Mamdani, who took office in January, has also committed to making child care free in one of the most expensive cities in the world.
"After rent, the biggest cost for New York's working families is child care," Mamdani said on his campaign website. "It's literally driving them out of the city: New Yorkers with children under 6 are leaving at double the rate of all others."
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