WalletHub, an online financial advisory site, recently released a study, Childcare Costs by State, to determine which states’ residents are paying the highest percentage of their annual income toward childcare.
Researchers analyzed the average prices of full-time, family-based and center-based childcare and compared them to the median annual income for married couples and single parents.
“It costs a lot of money to take care of a child’s needs, and many parents are left with the dilemma of whether to forgo one salary to do their own child care for the first few years or to shell out a significant chunk of their income for child care services. Married parents who both work can expect to spend as much as 13% of what they earn on child care, while single parents’ costs can amount to an astounding 51%,” said WalletHub analyst Chip Lupo.
New York ranked as the most expensive state for married couples, with parents paying 11.03% of their annual income for family-based care and 12.84% of their annual income for center-based care.
The state ranked as the second-most expensive for single parents, behind just Washington D.C., with single parents paying 38.42% of their annual income for family-based care and 44.71% of their annual income for center-based care.
Here’s a look at the top 10 most expensive states for childcare as a percentage of median annual income, according to the study.
Married Couples
1) New York
- Family-based care: 11.03%
- Center-based care: 12.84%
2) New Mexico
- Family-based care: 11.61%
- Center-based care: 11.14%
3) Washington
- Family-based care: 10.01%
- Center-based care: 12.61%
4) Oregon
- Family-based care: 9.61%
- Center-based care: 12.85%
5) Vermont
- Family-based care: 9.17%
- Center-based care: 13.17%
6) California
- Family-based care: 9.89%
- Center-based care: 12.32%
7) Rhode Island
- Family-based care: 10.42%
- Center-based care: 11.45%
8) Hawaii
- Family-based care: 8.15%
- Center-based care: 13.46%
9) Colorado
- Family-based care: 8.87%
- Center-based care: 11.77%
10) Massachusetts
- Family-based care: 8.22%
- Center-based care: 12.38%
Single parents
1) Washington, D.C.
- Family-based care: 44.59%
- Center-based care: 51.18%
2) New York
- Family-based care: 38.42%
- Center-based care: 44.71%
3) Massachusetts
- Family-based care: 32.19%
- Center-based care: 48.51%
4) Vermont
- Family-based care: 30.65%
- Center-based care: 44%
5) Rhode Island
- Family-based care: 35.1%
- Center-based care: 38.58%
6) Washington
- Family-based care: 32.59%
- Center-based care: 41.08%
7) New Mexico
- Family-based care: 36.34%
- Center-based care: 34.88%
8) Oregon
- Family-based care: 29.65%
- Center-based care: 39.63%
9) California
- Family-based care: 30.49%
- Center-based care: 37.96%
10) New Jersey
- Family-based care: 25.86%
- Center-based care: 42.57%
Childcare Tax Credit in New York
Assemblymember Michael Reilly, who represents the South Shore of Staten Island, introduced legislation in March to establish a childcare tax credit in New York to reimburse parents for a significant portion of their annual childcare costs.
“I introduced A5810 to address the immense financial strain placed on New York’s working families, especially in recent years and especially in single-parent households. In just New York City alone, more than 1/3 of children live in a single-parent household,” Reilly told the Advance/SILive.com earlier this year.
The bill, if passed and signed into law, would allow for 25% of New Yorkers’ annual childcare costs to be put against their taxes, reducing the amount of money they may owe the state come tax season.
“By allowing these families to apply 25% of their childcare expenses as a tax credit, we will have helped ease the burden that out-of-pocket costs place, allowing for greater flexibility to balance work, family life and other priorities,” Reilly explained.
The credit would apply to childcare costs incurred on children ages 13 and younger, as well as children with disabilities, regardless of their age.
If the bill were to become law, it would take effect immediately and apply to taxable years commencing on or after Jan. 1, 2026.
A 2023 report from the Citizens’ Committee for Children of New York found that 80% of New York City families with children under 5 years old cannot afford childcare and 80% of families with children ages six through 12 cannot afford out-of-school care.
Estimated annual childcare costs in New York City range from roughly $10,000 to $20,000 per child depending on age and the type of child care being provided, according to data from the Office of Children and Family Services’ 2022 New York State Child Care Market Rate Survey Report.
Researchers found that for home-based care, estimated annual childcare costs were $16,250 for ages zero through two, $14,300 for ages three through five and $10,840 for ages six through 12.
For center-based care, estimated annual childcare costs were $20,176 for ages zero through two, $16,900 for ages three through five and $11,760 for ages six through 12.
With the median income for all New York City families with children at $77,681 in 2022, the average family with one child between the ages of six and 12 could have spent between 11% and 26% of their income on childcare alone.
Similarly, the average family with one infant and another preschool-age child could have spent 36% of their income on home-based childcare or 43% of their income on center-based child care.
New York City’s childcare affordability crisis was found to disproportionately impact single parents, more than 90% of whom could not afford any care regardless of setting and across all age groups, according to the report.
“Now more than ever, our working families need relief, and this bill provides a common-sense solution that’ll put money back in the pockets of those who need it most,” the assemblymember said.
