Australia’s Child Care Subsidy (CCS) policy entered an important transitional phase in 2025, with new income caps and parent eligibility restrictions for financial assistance with early childhood education and care expenses. The most recent update intends to improve access to subsidised care, with revised income thresholds and an increase in hourly rate caps in response to high inflation and evolving family circumstances. Here’s what parents need to understand in order to optimise the system and their benefits.
The 2025 Income Cap Explained
CCS income caps increased New Income caps stretched the income ranges for subsidised care such that families with combined annual earnings of up to $535,279 became eligible starting July 7 2025. This income cap, along with the maximum subsidy thresholds, will be reviewed periodically to ensure appropriate cost and inflation coverage. Families who exceed this income range will not have access to CCS, which makes understanding your family income important in preparing and managing your care costs.
How Subsidy Rates Are Calculated
Income defines the percent of the CCS a family gets. Families that earn under $85,279 a year receive a maximum subsidy of 90%, which greatly eases the cost of childcare. As the income increases, the subsidy value starts to decrease 1% for every $5,000 earned over the base threshold, until it hits zero for families that earn over $535,279 a year. This is a “progressive scale” because it “targets support” to low and middle income families and households.
Extra Support for Larger Families
New rules provide Support for families with more than 1 child under 5 years old, and those families can earn under $367,563 a year. Families that earn under $367,563 a year can receive a higher subsidy rate for their younger children—up to 95% in some cases, which acknowledges the hardship of larger families and is meant to increase the incentives for work for parents to remain in the labour force.
Hourly Rate Caps and Types of Care
Starting in 2025, the government will once again lift the hourly rate caps, which will lessen the out-of-pocket expenses for many families. For instance, centre-based daycare and outside school hours care will have an hourly cap of $14.63, family daycare will be $13.56, and in-home care will be $39.80 per family. Subsidy percentages will apply to the hourly fee the service charges, or to these caps, whichever is lower.
| Income Bracket | Subsidy Percentage |
|---|---|
| Up to $85,279 | 90% |
| $85,280–$535,279 | 89–0% (sliding) |
| $535,280+ | 0% |
Keeping Your Subsidy Accurate
Reporting income estimates to Centrelink, usually through MyGov or the Centrelink app, will keep potential payment discrepancies or debts from arising. Changes in employment and household income are to be reported as soon as possible so entitlement levels can be kept accurate and the household doesn’t have to over pay in one quarter just to get a refund in the following quarter.
Frequently Asked Questions
Q1: What is the CCS income cap for 2025?
A: The CCS maximum combined family income will be $535,279.
Q2: How does income affect subsidy percentage?
A: Families subsidized 90% of the fees if their income is below $85,279. The subsidy rate will gradually reduce as the income increases and will be zero once the income surpasses $535,279.
Q3: Do I need to apply for CCS every year?
A: No, CCS will automatically renew after approval is obtained, but families have to maintain their income and activity levels for eligibility.
