Daycare fees for in-home daycare: what to charge and why

Last updated 2026-07-09

What do in-home daycare providers charge on average?

The national median for full-time infant care in a licensed home runs about $825 to $960 per month. Child Care Aware of America's 2024 'Price of Care' report puts the median weekly cost for family child care (the formal term for most licensed home daycares) at $221 for infants and around $194 for toddlers. Annualized, that's roughly $9,900 to $11,500 a year for a full-time infant slot ^[1]. Those are medians. The real spread is wider than most people expect.

In Mississippi or rural Appalachia, a licensed home provider might charge $550 to $750 a month. In San Francisco, Seattle, or the Boston suburbs, $1,800 to $2,200 is common. Child Care Aware publishes state-by-state breakdowns every year, and your state is probably the single biggest predictor of what you can charge. It matters more than your credentials or your years in the field.

Age matters too. Infants under 12 months are almost always your most expensive slot, because they take the most hands-on time and because state ratios limit how many infants one adult can supervise. Many home providers charge 10 to 25 percent more for infants than for preschoolers.

That premium is earned. An infant spot that eats two hours of your morning in feeding, changing, and settling is worth more than a spot for a self-sufficient four-year-old.

For a quick orientation to how home daycare rates compare to center-based care, see our overview at Daycare costs, licensing, and rules: the complete 2026 guide.

How should I set my weekly or monthly rate?

Start with your costs, not your neighbor's rates. New providers anchor to whatever the nearest home charges without doing the math first, and that's how people end up running full programs that barely cover supplies.

Here is the framework that actually works:

1. Estimate your annual operating costs: food, supplies, liability insurance, any assistant you pay, licensing fees, continuing education, and a fair allocation for utilities and home wear. Food alone can run $1,500 to $3,000 a year for a full group, depending on whether you're in the Child and Adult Care Food Program (CACFP) ^[2].

2. Add your target income. You're running a business. Decide what you need to net per year before taxes.

3. Divide by your full-time-equivalent slots and by the weeks you plan to operate. A six-slot program open 50 weeks needs each slot to cover costs plus your pay.

4. Check that number against the market. If your calculated rate lands 40 percent above what comparable licensed providers charge in your county, you have unusually high costs, an unusually small enrollment, or a pricing problem.

Most home providers run on thinner margins than they realize. Home daycare insurance alone typically costs $400 to $1,200 a year for combined general and professional liability coverage, and skipping it to keep rates low isn't a savings. It's a deferred liability.

Rates should reflect your credentials. A provider with a CDA credential or an associate degree in early childhood education has real grounds to charge at the top of the local range. Parents comparison-shopping between licensed home providers do notice credentials, especially for infant slots.

What is the average cost of in-home daycare by state?

The table below uses Child Care Aware 2024 data for licensed family child care, full-time infant rates ^[1]. Where Child Care Aware gives a range, the midpoint is used.

State	Avg. monthly infant rate	As % of median family income
California	$1,748	12.7%
Massachusetts	$1,725	10.4%
New York	$1,500	9.8%
Colorado	$1,350	9.6%
Texas	$1,050	8.1%
Florida	$975	8.9%
Illinois	$960	7.2%
Georgia	$875	7.5%
Ohio	$820	7.8%
Mississippi	$590	7.3%

These figures are for licensed family child care. Unlicensed informal arrangements (legal in some states up to a set number of children) tend to run 15 to 30 percent lower. The percentage-of-income column tells you where care is genuinely unaffordable for a median family, which is also where subsidy programs most often have waiting lists.

One honest caveat. Child Care Aware notes its data comes from state and provider surveys with varying response rates, so treat these as well-grounded estimates, not exact averages ^[1].

What fee structures do home daycare providers use?

There's no single standard. Most providers pick one of four structures, and each has real trade-offs.

Weekly flat rate. The most common one. You charge a set weekly amount whether or not the child shows up every day. It's the clearest for budgeting and it's standard in most states. The parent pays for the slot, not for attendance, the same logic a gym membership runs on.

Monthly flat rate. Same idea, billed by calendar month. This creates awkward five-week months and months where holidays bunch up. Some providers fix that by setting an annual fee and splitting it into 12 equal payments, which smooths the calendar.

Daily or drop-in rate. A higher per-day rate, usually 25 to 40 percent above the implied daily rate of your weekly fee, for families who need occasional care. If you offer it, cap how many drop-in days you take in a week or you'll find yourself short of guaranteed income.

Hourly rate. Really only sustainable for care sold in big blocks, like overnight or weekend coverage. Hourly rates for routine daytime care undervalue the fixed overhead you carry no matter how many hours you bill.

For more on scheduling structures that shape fee design, our part time daycare article covers how providers price partial-week arrangements without giving away margin.

A note on structure. Charging for enrolled weeks whether or not the child attends is standard and defensible. A registration or enrollment fee of $50 to $200 to hold a spot is standard too. So is a non-refundable deposit equal to one or two weeks of fees before care begins. It filters out families who aren't serious.

What fees can I legally charge, and are there any restrictions?

In most states, home daycare providers can charge private-pay families whatever the market will bear. There's no state cap on private-pay rates. A few things do constrain your fee structure, though, and every one of them can bite you if you get it wrong.

Subsidy program rates. If you accept state child care subsidies funded through the Child Care and Development Fund (CCDF), the state sets a maximum reimbursement, called the market rate, for each age group and care type in each region ^[3]. Federal CCDF rules at 45 CFR 98.45 require states to base those rates on a market rate survey conducted at least every three years. In many states the reimbursement sits below the 75th percentile of actual prices, so accepting subsidized families can mean accepting less than your private-pay rate.

The 2024 CCDF rule tightened this. States must set payment rates to give equal access consistent with market rates, and the federal benchmark points to the 75th percentile ^[3]. Some states were already there. Others are still catching up. Check your state's CCDF lead agency for current reimbursement rates by county.

Co-payments. When a family gets a CCDF subsidy, the state sets their co-payment (the family share). Under the 2024 federal rule, family copayments are capped at 7 percent of household income ^[3]. Many states go further and prohibit charging subsidy families a top-up above the reimbursement rate. That's a compliance line, not a suggestion. Unauthorized top-ups have driven fraud enforcement in several states.

Late fees and returned-payment fees. Most states allow these, but some require them disclosed in writing to parents before you assess them. Put them in your contract.

Fee disclosure rules. A handful of states require licensed home providers to post their rates or include them in a parent disclosure form that becomes part of the licensing record. Read your state's licensing regulations.

How does the CCDF subsidy system affect what I get paid?

The Child and Development Fund is the biggest federal childcare subsidy program, and it shapes the pay for every provider who takes subsidized families. CCDF sends roughly $8 billion a year to states through block grants ^[3]. States add matching funds and route subsidies to eligible low-income families, who spend them at participating providers.

To take CCDF-funded families you must be licensed (in states that require licensure for home providers) or meet an alternative quality standard. Then you agree to the state's reimbursement rates.

What states actually pay varies enormously. The National Women's Law Center reported that many states set family child care reimbursement well below the 75th percentile of market rates, meaning providers get paid less than a large share of their local market charges ^[4]. The 2024 federal rule tightening the 75th-percentile benchmark was meant to close that gap, but states have staggered compliance deadlines and enforcement is indirect.

Here's what that means at your kitchen table. If you take subsidy families at below-market rates, you're either cross-subsidizing those slots with your private-pay income or running them at a loss. Neither is wrong on its face. Just do it on purpose, not by accident.

Subsidy rules also create friction around absences. Many providers charge for days a child is out because the slot stays reserved. Some state subsidy systems won't reimburse absences past a set number of days per month. Learn your state's excused-absence policy before you sign up subsidy families.

For how fraud creeps into subsidy billing and the compliance risk that follows, our minnesota daycare fraud article walks through a documented case.

What expenses should my fees cover?

Home providers routinely lowball their own costs because so many of them hide inside the household budget. Here's a realistic picture for a licensed six-slot home daycare open 50 weeks a year:

Expense category	Annual estimate
Food (CACFP partially offsets this)	$1,800, $3,200
Supplies (art, diapers if provided, cleaning)	$800, $1,500
Liability and professional liability insurance	$400, $1,200
Licensing fees and renewals	$50, $300
Continuing education (required hours)	$100, $400
Background checks (staff and household members)	$100, $300
Furniture and equipment depreciation	$300, $600
Advertising and enrollment costs	$100, $400
Portion of utilities (heat, A/C, water)	$600, $1,200
Total operating costs	$4,250, $9,100

With six full-time slots across 50 weeks, each slot has to generate at least $708 to $1,517 a year just to cover overhead, before you pay yourself a dime. That's $14 to $30 per week per slot in pure overhead.

CACFP can dent your food bill in a real way. Providers who qualify (generally licensed home providers, with higher tier rates for those in lower-income areas) get federal meal reimbursements that can cut food costs by $500 to $2,500 a year, depending on enrollment and meals served ^[2]. If you're not enrolled in CACFP yet, it's probably the highest-return paperwork on your desk.

For cleaning supplies and protocols that double as a licensing requirement, see daycare cleaning for a cost-by-task breakdown.

Home daycare liability coverage runs about $400 to $900 a year for many providers, and daycare liability insurance covers what the policy actually needs to include.

Should I offer sibling discounts or sliding-scale fees?

Sibling discounts are common, usually 5 to 15 percent off the second child's rate. They keep families who'd otherwise leave when a second child arrives, and they fill two slots off one marketing effort. Whether the math works depends on how full you are. If you have a waitlist, a sibling discount just hands away money with no enrollment upside. If you're fighting to fill slots, it's a fair tool.

Sliding-scale fees (less for lower-income families, more for higher-income ones) are administratively heavy and legally fuzzy in some states. If a state subsidy already exists for lower-income families, a sliding scale duplicates a system that's already built. The cleaner move is to take subsidy-eligible families at the subsidy rate and charge private-pay families your market rate, instead of running a separate scale that forces you to verify family incomes.

One trap to avoid. If you take CCDF subsidies and also hand private-pay families a cash discount that drops their rate below your subsidy reimbursement rate, you can create a compliance problem. The specifics vary by state, but the principle holds: don't build a system where subsidy families effectively pay more than private-pay families for the same care.

How do I handle late payments, returned checks, and nonpayment?

Payment policy is where friendly home providers get burned most often. Put everything in writing before care starts. Your contract should spell out the due date (most providers require payment weekly or monthly in advance), the late fee (typically $10 to $25 per day after a grace period of 1 to 3 days), the returned-check fee (typically $25 to $35 to cover your bank's charge plus your time), and your termination policy for chronic nonpayment.

Most providers allow a grace period of two to five business days before a late fee kicks in. Some charge a flat fee, others charge per day. Both are legal in virtually every state as long as you disclosed them in writing.

A family that's consistently late is almost always telling you the rate doesn't fit their budget. The kind and businesslike move is a direct conversation: adjust the arrangement or part ways. Carrying a family for weeks while you hope they catch up is a reliable path to a big uncollected balance and a burned relationship.

For collections, small claims court is open in every state for debts under a cap that ranges from $2,500 to $25,000 depending on the state. You don't need a lawyer. A signed contract, dated invoices, and a documented payment history is enough for most judges. The harder question is whether the family has assets you can actually collect from, which often they don't.

ChildCareComp's compliance toolkit includes sample contract language for payment policies that meets disclosure requirements in most states. Worth a look before you finalize your enrollment paperwork.

What should I include in my written fee policy and parent contract?

Many states require licensed home providers to give parents a written fee disclosure before enrollment. Even where it isn't required, a written contract is your protection. Write it once, use it for every family.

At minimum your fee policy should cover:

• Weekly or monthly rate per child, by age group
• What the rate includes (meals, snacks, supplies, diapers, or not)
• Payment due date and accepted payment methods
• Late payment fees and grace period
• Returned-payment fees
• Registration or deposit amount, and whether it's refundable
• Holiday and closure schedule, and whether full fees are due during closures
• Absence policy: whether the family pays for absent days (the standard answer is yes, they're paying for the slot)
• Rate increase policy, including how much notice you give
• Termination procedures and notice requirements on both sides

Licensing rules in most states require specific disclosures. California's Title 22 regulations require licensed family child care homes to have a written parent-provider agreement that states the rate of payment and the payment due date ^[5]. Minnesota Rule 9502 requires a written contract that includes fees and the provider's policies ^[6]. Check your state's home provider licensing regulations for the exact list.

Giving 30 to 60 days' written notice of rate increases is standard, and state licensing agencies often cite it as best practice even where the law doesn't demand it.

How often should I raise my rates?

Once a year is the answer most experienced home providers land on, usually at the start of the calendar year or the start of a program year in September. Increases of 3 to 7 percent a year are normal and defensible. Tie your raise to your documented cost increases (food, supplies, insurance renewals) and it gets much easier to explain to families.

The providers who struggle most are the ones who skip raises for two or three years, then need a big catch-up. Families who've paid the same rate for three years feel a 15 percent jump as a shock, even when it only gets you back to where the market already moved. Small, predictable annual bumps are far easier to absorb.

Notify families in writing at least 30 days before an increase takes effect. Most providers give 45 to 60 days, which lets families adjust their budgets or, if they decide to leave, gives you time to fill the slot.

One honest caveat. In markets where licensed home care is genuinely scarce, you have real pricing power. In crowded markets, your ability to raise rates depends more on your retention record and reputation. Nobody has great nationwide data on this at the home-provider level, but Child Care Aware's supply maps give a rough regional read ^[1].

What are the tax implications of the fees I charge?

Every dollar you collect from families is taxable income. That includes registration fees, late fees, and any deposit you keep when a family leaves without proper notice. Deposits you return are not income.

Home daycare providers get to deduct business expenses, and the IRS has a specific method built for family child care: the Time-Space percentage. It lets you deduct a portion of home costs (mortgage interest or rent, utilities, repairs, depreciation) based on what share of your home's square footage is used for daycare and what share of your time the space is used for daycare versus personal life ^[7]. IRS Publication 587 spells out the business-use-of-home rules.

The National Association for Family Child Care (NAFCC) and Tom Copeland's publications have long been the clearest practical guides to running the Time-Space percentage correctly ^[10]. Copeland has retired, but his materials are still widely cited and available through Redleaf Press.

Pay any household member or assistant $600 or more in a year and you may pick up payroll tax and reporting duties. Providers who take CCDF subsidy payments get 1099 forms from their state, and those payments count as income in the year received.

Estimated quarterly taxes are almost certainly required if you expect to owe $1,000 or more for the year. Miss them and you trigger underpayment penalties ^[7].

Frequently asked questions

What is the average monthly cost of a licensed in-home daycare?

Child Care Aware of America's 2024 data puts the national median at roughly $825 to $960 a month for full-time infant care in licensed family child care homes. For preschool-age children, the median runs $750 to $850 a month. State swings are large: Mississippi averages around $590 a month while California averages around $1,748 a month for infants.

Can I charge more than what the state subsidy reimburses?

For private-pay families, yes, you can charge whatever the market supports. For families using CCDF subsidies, most states prohibit charging a top-up above the state reimbursement rate plus the family's co-payment. Unauthorized top-ups are a compliance violation that can cost you your spot in the subsidy program. Read your state's CCDF provider agreement before you bill any subsidy family.

Do I have to charge the same rate for all children?

No. Charging different rates by age group is standard, with infants above toddlers and toddlers above preschoolers. You can also charge different rates by schedule type (full-time, part-time, drop-in). What you cannot do is charge different rates based on protected characteristics like race, religion, or disability, which federal and state civil rights laws prohibit.

What is a reasonable registration or deposit fee for home daycare?

Most home providers charge a registration fee of $50 to $200 and a deposit equal to one to two weeks of care. The deposit is typically non-refundable if the family leaves without proper notice, but converts to the last week's payment when proper notice is given. Disclose both fees clearly in writing before the family signs anything.

Should I charge for days the child is absent or sick?

Yes, in almost every case. You're selling a reserved slot, not attendance. Your fixed costs (utilities, insurance, the time set aside for that child) don't disappear when a child stays home sick. The overwhelming industry standard is to charge for enrolled days regardless of attendance, with a possible break for extended absences of two weeks or more. Make the policy explicit in your contract before care starts.

Can I charge for holidays and days I close my daycare?

Yes, you can charge for scheduled closures (holidays, provider vacation) as long as it's disclosed in your parent contract before enrollment. Most providers include a set number of paid closure days per year, typically 8 to 12, and families agree to it in the contract. Charging for unscheduled closures, like when you're sick, is trickier and varies by provider policy.

What is the CACFP program and how does it affect my costs?

The Child and Adult Care Food Program (CACFP) is a USDA program that reimburses home daycare providers for meals and snacks served to enrolled children. Eligible licensed providers can receive $500 to $2,500 a year in food reimbursements, depending on enrollment and meals served. Participation is free and cuts your out-of-pocket food costs in a real way. Apply through your state's CACFP sponsoring organization.

How much notice should I give parents before raising my rates?

30 days is the legal minimum in most states that specify a notice period. 45 to 60 days is the professional standard and what most experienced providers recommend. Give notice in writing. Annual increases of 3 to 7 percent, applied consistently, are far easier for families to absorb than irregular larger jumps after years of flat rates.

What happens if a family does not pay their daycare fees?

Start with a direct conversation, usually within a day or two of a missed payment. Most nonpayment is a communication gap or a temporary budget crisis, not intent. If the debt grows and the family goes quiet, small claims court is a real option in every state. Bring a signed contract, invoices, and payment records. Whether you can actually collect depends on the family's finances.

Are in-home daycare fees tax deductible for parents?

Yes. Fees paid to a licensed home daycare provider can qualify for the federal Child and Dependent Care Credit (IRS Form 2441), which covers expenses up to $3,000 for one child or $6,000 for two or more, with a credit rate of 20 to 35 percent depending on income ^[8]. The parent needs your name, address, and tax ID (SSN or EIN) to claim it. Providers are legally required to hand over that information.

Do I need to give parents a receipt or tax form for the fees they pay me?

You're required to provide your taxpayer ID number to parents who request it for the Child and Dependent Care Credit. You are not required to issue a 1099 to parents. Still, an annual statement of total fees paid makes you easier to work with and builds trust. Many providers give a simple year-end statement showing total fees paid, provider name, address, and tax ID.

How do in-home daycare fees compare to daycare center fees?

Licensed home-based family child care usually costs 15 to 30 percent less than licensed centers in the same market, per Child Care Aware data. The gap is widest for infant care, where centers face strict staff-to-child ratios that push their costs up. For school-age children the gap narrows. Home providers who offer evening or weekend care often have no center competition at all.

Can I charge a late pickup fee?

Yes, and most licensing agencies recommend it. Late pickup fees pay you for unplanned overtime and discourage the pattern of parents arriving 20 to 30 minutes after closing. A typical structure is $1 to $2 per minute after a 5-minute grace period. It has to be disclosed in your contract before care starts. Some state licensing rules specifically require any fee charged to families to be in writing.

Sources

1. Child Care Aware of America, 'Price of Care' annual report 2024: National median weekly cost for family child care is $221 for infants and approximately $194 for toddlers; state-by-state cost breakdowns published annually
2. USDA Food and Nutrition Service, Child and Adult Care Food Program (CACFP): CACFP reimburses licensed home providers for meals and snacks served to enrolled children; eligible providers receive reimbursements that can reduce food costs by hundreds to thousands of dollars per year
3. U.S. Department of Health and Human Services, Office of Child Care, CCDF regulations 45 CFR Part 98: CCDF market rate requirements at 45 CFR 98.45; 2024 rule directs states toward the 75th percentile of market rates and caps family copayments at 7% of household income
4. National Women's Law Center, early childhood care and education policy reports: Analysis showing many states set family child care reimbursement well below the 75th percentile of market rates
5. California Department of Social Services, Title 22 Family Child Care Home Regulations: California Title 22 requires licensed family child care homes to have a written parent-provider agreement including rate of payment and payment due date
6. Minnesota Department of Human Services, Family Child Care Licensing, Minnesota Rule 9502: Minnesota Rule 9502 requires a written contract between family child care provider and families including fees and provider policies
7. IRS Publication 587, Business Use of Your Home: IRS Time-Space percentage method allows family child care providers to deduct a portion of home costs based on square footage and time used for daycare; estimated quarterly tax payments required if expected annual tax owed is $1,000 or more
8. IRS, About Form 2441, Child and Dependent Care Expenses: Fees paid to licensed home daycare providers qualify for the federal Child and Dependent Care Credit on up to $3,000 for one child or $6,000 for two or more; credit rate 20 to 35 percent depending on income
9. U.S. Department of Health and Human Services, Office of Child Care: States must conduct child care market rate surveys at least every three years under CCDF; the 2024 federal rule tightens the payment rate standard with staggered state compliance deadlines
10. National Association for Family Child Care (NAFCC), accreditation and business resources: NAFCC provides standards and business guidance for licensed home-based family child care providers including fee-setting best practices