Is It Worth Going Back to Work?

The real question

“Is it worth going back to work?” is one of the most common questions Australian parents ask — and one of the most misunderstood.

The simple version — I'll earn $X and childcare costs $Y, so I'm ahead by $X − $Y — misses several major factors. When you return to work, your family's combined income rises, which means:

• You pay income tax on your new earnings
• Your higher combined income can reduce your CCS rate
• You face new childcare costs that didn't exist before
• You incur work-related costs — commuting, lunches, clothing

The question isn't “how much will I earn?” — it's “how much will my family be better off?” after accounting for every cost that comes with working.

The five costs of returning to work

When a parent returns to work, the family faces five financial impacts:

1. Income tax — Your new income is taxed at your marginal rate. A parent earning $48,000 (3 days at $80k FTE) pays roughly $5,900 in tax and Medicare.
2. Reduced CCS — If your new combined family income pushes you above $85,279, your CCS percentage drops. Every $5,000 increase costs 1 percentage point.
3. New childcare fees — You now need to pay for care that didn't exist when you were home. Even with CCS, the out-of-pocket gap adds up.
4. Work-related costs — Commuting, parking, professional clothing, bought lunches, and other expenses that don't exist when you're at home.
5. Lost benefits — Some family payments (like Family Tax Benefit Part B) may reduce as your income rises.

How returning to work reduces your CCS

This is the part that surprises most parents. The Child Care Subsidy is based on your combined family income, not just the working parent's income. When you go back to work, your combined income rises — and your CCS rate falls.

Here's how the cascade works:

1. You return to work and earn additional income
2. Your combined family income increases
3. The higher income pushes you into a lower CCS bracket
4. Your childcare subsidy percentage drops
5. You pay a larger gap fee per day of childcare
6. The extra childcare cost eats into your income gain

The size of this effect depends on where your family sits on the income scale. If your combined income is well below $85,279 even after returning to work, you keep the full 90% CCS — no cascade at all. But if returning to work pushes your combined income from $90,000 to $140,000, you could lose 10 percentage points of CCS.

Example 1: Low income — Jenny returns 3 days/week

Jenny's combined income stays below $85,279, so CCS stays at the maximum 90% — no cascade effect at all.

The financial breakdown:

The verdict: Jenny's family is $24,262 per year better off. Her effective hourly rate is $21.28 — lower than her headline $24.04/hr (at $50k FTE), but a strong net positive. Because their combined income stays under the $85,279 threshold, CCS didn't reduce at all.

Example 2: Middle income — Priya returns 3 days/week

Here the CCS cascade is visible: Priya's income pushes the family from $90,000 to $138,000, and CCS drops from 89% to 79%. That 10-point drop means the government covers 10% less of the childcare fee.

The financial breakdown:

The CCS cascade cost Priya $2,250/year — that's the difference between paying 11% of the fee (if CCS had stayed at 89%) and paying 21% (at 79%). But her net benefit of $34,407/year means the cascade is a footnote, not a deal-breaker.

Example 3: High income — Sarah returns 3 days/week

The CCS cascade is more pronounced at higher incomes. Sarah's return drops CCS by 15 points — from 77% to 62%. But her higher income also means more tax.

The financial breakdown:

Despite losing 15 percentage points of CCS, Sarah's family is $44,052 per year better off. Her effective hourly rate of $38.64 is well below her headline $57.69/hr (at $120k FTE), but the absolute dollar benefit is the highest of our three examples — because higher income simply generates more after-tax dollars.

Part-time vs full-time

A question many parents face is whether to return 3 days or push to 5. The financial return per additional day is not equal — each extra day faces diminishing returns:

• Days 1–3 produce the highest per-hour return. Your tax-free threshold and lower tax brackets absorb the first portion of income, and CCS may not yet be affected if you stay under $85,279 combined.
• Days 4–5 produce lower per-hour returns. Your marginal tax rate is higher (every extra dollar is taxed at 30% or more), and the additional income pushes CCS down further. You also face the same fixed work costs over more days.

Our back-to-work calculator shows the net benefit for every scenario from 1 to 5 days, making it easy to compare the financial return at each level and find your family's optimal point.

Hidden costs people forget

Beyond the five main costs, parents often overlook:

• Sick days and closures — When your child is sick or the centre is closed, you may need to take unpaid leave or pay for backup care. Many centres still charge fees for absent days.
• School holiday care — If your child is school-age, you'll need (and pay for) vacation care during the 12 weeks of school holidays.
• The income estimate trap — If you underestimate your family income when setting up CCS, you may receive too much subsidy during the year and face a debt at reconciliation. Always update your income estimate when returning to work.
• Reduced Family Tax Benefit — Higher combined income can reduce Family Tax Benefit Part A and eliminate Part B entirely. Factor these in if they are a significant part of your current household income.

The benefits beyond money

The financial calculation is important, but it's not the whole picture. Returning to work has significant long-term and non-financial benefits that don't appear in any spreadsheet:

• Superannuation — Employer super contributions (11.5% in FY 2025–26) compound over decades. Three days a week at $80,000 FTE earns roughly $5,520/year in super — money your future self will thank you for.
• Career continuity — Extended breaks from the workforce can make it harder to return at the same level later. Staying connected to your profession — even part-time — protects your long-term earning potential.
• Salary progression — Working now leads to pay rises, promotions, and experience that increase your earning capacity in future years when childcare costs end.
• Professional identity and wellbeing — Many parents report that working provides a sense of purpose, adult connection, and personal fulfilment that improves their overall wellbeing.
• Child development — Quality childcare is associated with positive social, emotional, and cognitive development. Your child benefits from the care environment, not just the time there.

How to decide

Here's a practical framework for making the decision:

1. Run the numbers — Use our back-to-work calculator to see your net benefit across 1–5 day scenarios. Look at the effective hourly rate, not just the total.
2. Factor in super — Add roughly 11.5% of your proportional gross income as a hidden benefit that doesn't show in take-home pay.
3. Consider the trajectory — Childcare costs are temporary (they end when children start school), but career breaks can have permanent effects on earning potential.
4. Include the personal — Professional fulfilment, adult connection, and your child's benefit from quality care are real factors even if they can't be measured in dollars.
5. Start with fewer days — If the numbers are tight, returning 2–3 days per week gives you the highest per-hour return and lets you test the arrangement before committing to more.

The decision is deeply personal, and there is no universally right answer. But with accurate numbers, you can make the choice that's right for your family with confidence rather than guesswork.