Planning for a new baby is an exciting time, but for many parents in 2026, it also comes with big questions about childcare costs. It’s often the biggest expense a family faces—sometimes even costing more than a mortgage or rent payment. Understanding what daycare looks like today is the first step in building a financial plan that works for you. We want to help you review current costs and outline how to build a safety net that keeps your family’s future on solid ground.
National Annual Averages for Childcare Costs
Childcare is a major part of the family budget, and the prices can vary quite a bit depending on where you live. According to the latest data from Child Care Aware, the national average is significant, but it really depends on the type of care that best fits your lifestyle. For example, families in Massachusetts pay an average of $24,005 per year for infant center-based care, while parents in Mississippi pay an average of $6,868 per year. Regardless of the cost difference, for many families, these costs aren't just a bill—they're a major factor in balancing work and home life.
When you start looking at your local options, you’ll likely see a few different paths:
Daycare Centers: These are typically the most expensive because they must cover building costs and comply with specific staff-to-child ratios, especially for infants.
In-Home Daycares: Many parents find these home-based settings a bit more budget-friendly while still offering a rich, structured environment.
Nannies: This is the most flexible option, but it usually comes with the highest cost, as you’re paying for one-on-one attention.
It’s important to factor in your location; costs in big cities or on the coasts can sometimes be double what you’d find in smaller towns. Don't forget to look beyond the monthly tuition. Most places have a few additional costs—such as registration fees, art project supply fees, and meal charges. When you add those in upfront, it’s much easier to stay on top of your monthly spending.
Smart Ways to Offset the Daycare Bill
It is completely normal to feel a bit of sticker shock when you see the total price tag for childcare, but try not to let those numbers overwhelm you. By shifting your focus from the high cost to the tools available to help, you can start to find some breathing room in your budget. There are several programs—both through the government and your employer—specifically designed to put some of that hard-earned money back into your pocket.
Here are a few ways to help lower your out-of-pocket costs:
Dependent Care FSA: In 2026, you can use a Dependent Care Flexible Spending Account to set aside money before taxes are taken out, which lowers your overall tax bill.
Child Tax Credit: Keep an eye on the 2026 income limits so you can take full advantage of this credit when you file your taxes.
Workplace Perks: It’s always worth asking your HR department if they offer childcare subsidies or discounts at local centers.
Thinking Ahead: Ensuring both parents are protected—including life insurance for stay-at-home parents—helps keep your childcare plan safe even if life takes an unexpected turn.
Using these tools can make a huge dent in the total amount you actually pay. Once you’ve looked into tax breaks and work benefits, the next step is making sure your long-term plan supports your daily life.
Why Life Insurance is Part of the Childcare Equation
We usually think of life insurance as a way to pay off big debts, but it’s also a huge part of your childcare strategy. If a parent were to pass away, the family would face a gap in both care and income. Life insurance is like a safety net that ensures your kids can keep attending the daycare they love without putting the surviving parent in a tough financial spot.
Having a solid policy helps in a few really important ways:
Closing the Gap: If one parent passes away, the death benefit can cover annual childcare expenses, allowing the surviving parent to continue working.
Helping Stay-at-Home Parents: If the primary earner passes away, life insurance for new parents can give a stay-at-home parent the choice to stay home or cover the cost of daycare if they need to start a new job.
Term Life Insurance: Many parents choose term life insurance to cover childcare because you can pick a term that lasts right up until your kids are old enough to be out of daycare.
Permanent Options: If you’re looking for something long-term, you can compare term vs. whole life insurance. Some permanent policies build up cash value that you can use for family expenses down the road.
Whether you're looking for term life for stay-at-home parents or something more permanent, the goal is peace of mind. It’s about knowing your children will be taken care of no matter what.
Securing Your Family’s Future with SelectQuote
Childcare is a big investment, but it’s much more manageable when you have a clear budget and a backup plan. You might be surprised to find out that life insurance is often more affordable than you think—sometimes it costs less per month than a week’s worth of diapers. We know parents are busy, and having someone else handle the heavy lifting can make life much easier.
At SelectQuote, our licensed agents are experienced professionals who help families find the right fit. Our agents are here to listen to your needs and identify options that fit your budget. We’ve helped over 60 million families by comparing options from top-rated companies to make sure you get the right coverage.
When you’re ready to see how easy it is to protect your family’s future, we’re here to help you find the best path forward.
This content is for informational and educational purposes only and does not constitute professional financial, investment, or legal advice. While we strive for accuracy (see our Editorial Standards), financial markets and laws change frequently. We recommend consulting with a qualified financial professional or attorney before making any major decisions.
Sources:
Child Care Aware of America: 2024 State of Child Care Data (Projected for 2026)
U.S. Department of Labor: National Database of Childcare Prices
Internal Revenue Service (IRS): Publication 503 Child and Dependent Care Expenses
