How the income test works
The Child Care Subsidy income test is the main factor that determines your CCS percentage — the share of the hourly fee (up to the rate cap) that the government pays on your behalf. The higher your combined family income, the lower your subsidy rate.
For FY 2025–26, the system works on a single continuous taper:
- Families earning $85,279 or less receive the maximum 90% subsidy
- For every $5,000 above that threshold, the rate drops by 1 percentage point
- The subsidy reaches 0% at approximately $535,279
This means the income test is not a cliff. You don't suddenly lose CCS when you cross a threshold — it tapers gradually. An extra $10,000 in income only reduces your CCS rate by 2 percentage points.
The tapering formula
The exact formula used by Services Australia to calculate your standard CCS rate is:
CCS% = max(0, 90 − ⌈(income − 85,279) ÷ 5,000⌉)
Where ⌈ ⌉ means “round up to the next whole number”
Let's break that down step by step:
- Subtract the threshold: Take your combined family income and subtract $85,279. If the result is zero or negative, your CCS rate is 90% (the maximum).
- Divide by $5,000: This tells you how many “brackets” above the threshold you sit.
- Round up: Even if you're $1 into the next bracket, the full bracket counts. For example, $90,280 is exactly $1 into the second bracket above the threshold, so it rounds up to 2 brackets.
- Subtract from 90%: Each bracket costs you 1 percentage point.
The “round up” step is important — it means even a small income increase that pushes you into the next $5,000 bracket will cost you a full percentage point of CCS. However, in dollar terms, 1 percentage point is relatively minor (about $2–$4 per day per child depending on your fee).
Full CCS rate table (FY 2025–26)
The table below shows the standard CCS rate at key income levels. Use it to quickly look up your approximate subsidy, or use our CCS calculator for a precise figure based on your exact income.
| Combined family income | Standard CCS % | Brackets above threshold |
|---|---|---|
| $60,000 | 90% | 0 (below threshold) |
| $85,279 or below | 90% | 0 (maximum) |
| $90,000 | 89% | 1 |
| $95,000 | 88% | 2 |
| $100,000 | 87% | 3 |
| $110,000 | 85% | 5 |
| $120,000 | 83% | 7 |
| $130,000 | 81% | 9 |
| $140,000 | 79% | 11 |
| $150,000 | 77% | 13 |
| $160,000 | 75% | 15 |
| $170,000 | 73% | 17 |
| $180,000 | 71% | 19 |
| $200,000 | 67% | 23 |
| $220,000 | 63% | 27 |
| $250,000 | 57% | 33 |
| $300,000 | 47% | 43 |
| $350,000 | 37% | 53 |
| $400,000 | 27% | 63 |
| $450,000 | 17% | 73 |
| $500,000 | 7% | 83 |
| $535,279+ | 0% | 90 (no subsidy) |
What counts as family income?
CCS uses adjusted taxable income (ATI), which is broader than your gross salary. For a couple, both partners' ATI is added together. ATI includes:
- Taxable income — your salary/wages, business income, and other assessable income minus allowable deductions
- Reportable fringe benefits — shown on your payment summary. Includes salary sacrifice to super, novated car leases, and other fringe benefits
- Total net investment losses — negative gearing on rental properties or investment losses are added back to your ATI. This means you cannot use investment losses to reduce your CCS income
- Reportable superannuation contributions — voluntary super contributions you make (salary sacrifice or personal deductible contributions)
- Tax-exempt foreign employment income — income earned overseas that is exempt from Australian tax
- Certain tax-free government payments — some government pensions and benefits (but not all)
Income sources people forget
When estimating family income for CCS, these are the items most commonly overlooked — leading to an unpleasant surprise at reconciliation:
- Capital gains — if you sell shares, crypto, or an investment property during the year, the capital gain increases your taxable income (and therefore your ATI). Even a one-off sale can temporarily push your CCS rate down for that year.
- Rental property profits — especially if a previously negatively-geared property turns profitable due to rent increases or reduced interest rates.
- Net investment losses being added back — many families assume that a rental loss or share trading loss reduces their income for CCS. It doesn't — net investment losses are added back to ATI.
- Employer super contributions above the standard rate — if your employer contributes more than the mandatory 11.5%, the excess may count as reportable fringe benefits.
- Bonuses and overtime — a one-off bonus or period of heavy overtime increases your actual income above your estimate.
- Partner's income changes — one partner getting a pay rise, new job, or side income that wasn't included in the original estimate.
- Government payments — some payments (like Parental Leave Pay) count as taxable income. Check with Services Australia which payments are included.
The annual subsidy cap
In addition to the percentage-based taper, there is an annual CCS cap of $11,003 per child for families earning above $85,279.
- Families earning $85,279 or below have no annual cap — they receive subsidised care without limit
- Families earning above $85,279 are subject to a cap of $11,003 per child per financial year
Will the cap affect your family? For most families, no. The cap is generous enough that you would need to use more than about 4 days per week of expensive care at a moderate-to-low CCS rate for an entire year to reach it. Here's a quick check:
| Days per week | Daily fee | CCS rate | Annual CCS paid | Hits cap? |
|---|---|---|---|---|
| 3 days | $150 | 77% | $17,325 | Yes — hits cap at ~week 32 |
| 3 days | $130 | 87% | $16,965 | Yes — hits cap at ~week 33 |
| 2 days | $150 | 77% | $11,550 | Barely — hits cap near year end |
| 3 days | $120 | 67% | $12,060 | Barely — hits cap near year end |
| 2 days | $130 | 87% | $11,310 | Barely |
| 2 days | $120 | 67% | $8,040 | No |
If you're concerned about hitting the cap, our CCS calculator factors in the annual cap and shows whether it applies to your family.
Worked example: $95,000 combined income
Step 1 — Calculate the CCS rate:
Income $95,000 − threshold $85,279 = $9,721 above the threshold.
$9,721 ÷ $5,000 = 1.944, rounded up = 2 brackets.
CCS rate = 90% − 2% = 88%.
Step 2 — Check the hourly rate cap:
Noah's hourly fee is $11.67. The cap for centre-based care (below school age) is $14.63. Since $11.67 < $14.63, the full fee is within the cap — no above-cap gap.
Step 3 — Calculate daily subsidy and gap:
CCS per day = $140.00 × 88% = $123.20
Gap fee per day = $140.00 − $123.20 = $16.80
Step 4 — Annual cost (3 days × 50 weeks):
| Per day | Per week | Per year | |
|---|---|---|---|
| Gross fee | $140.00 | $420.00 | $21,000 |
| CCS covers | $123.20 | $369.60 | $18,480 |
| You pay (after reconciliation) | $16.80 | $50.40 | $2,520 |
The bottom line: At $95,000, Lisa and David pay about $50 per week out of pocket for Noah's childcare. That's 12% of the total fee — the government covers the other 88%.
Worked example: $180,000 combined income
Step 1 — Calculate the CCS rate:
Income $180,000 − threshold $85,279 = $94,721 above the threshold.
$94,721 ÷ $5,000 = 18.944, rounded up = 19 brackets.
CCS rate = 90% − 19% = 71%.
Step 2 — Check the hourly rate cap:
Ava's hourly fee is $13.33. The cap is $14.63. Since $13.33 < $14.63, the full fee is within the cap.
Step 3 — Calculate daily subsidy and gap:
CCS per day = $160.00 × 71% = $113.60
Gap fee per day = $160.00 − $113.60 = $46.40
Step 4 — Annual cost (4 days × 50 weeks):
| Per day | Per week | Per year | |
|---|---|---|---|
| Gross fee | $160.00 | $640.00 | $32,000 |
| CCS covers | $113.60 | $454.40 | $22,720 |
| You pay (after reconciliation) | $46.40 | $185.60 | $9,280 |
Important — annual cap check: Meera and Chris earn above $85,279, so the $11,003 annual cap applies. Their annual CCS of $22,720 exceeds the cap. This means CCS payments will stop once the cap is reached (around week 24), and they'll pay the full $160/day fee for the remaining weeks. Their actual annual out-of-pocket will be higher than $9,280 — approximately $20,997 ($32,000 gross minus $11,003 cap).
Worked example: $350,000 combined income
Step 1 — Calculate the CCS rate:
Income $350,000 − threshold $85,279 = $264,721 above the threshold.
$264,721 ÷ $5,000 = 52.944, rounded up = 53 brackets.
CCS rate = 90% − 53% = 37%.
Step 2 — Check the hourly rate cap:
Isla's hourly fee is $14.17. The cap is $14.63. The full fee is within the cap.
Step 3 — Calculate daily subsidy and gap:
CCS per day = $170.00 × 37% = $62.90
Gap fee per day = $170.00 − $62.90 = $107.10
Step 4 — Annual cost (3 days × 50 weeks):
| Per day | Per week | Per year | |
|---|---|---|---|
| Gross fee | $170.00 | $510.00 | $25,500 |
| CCS covers | $62.90 | $188.70 | $9,435 |
| You pay (after reconciliation) | $107.10 | $321.30 | $16,065 |
Annual cap check: The annual CCS of $9,435 is below the $11,003 cap, so Kate and Matt do not hit the cap despite their high income. This is because their CCS rate is already low (37%), and they only use 3 days per week.
The bottom line: Even at $350,000 combined income, the government still contributes $9,435 per year toward Isla's childcare — a 37% subsidy. Kate and Matt pay about $321 per week out of pocket, compared to the $510 they would pay without any subsidy.
Updating your income estimate
Your CCS rate during the year is based on the family income estimate you provide to Services Australia through your myGov/Centrelink account. It's not automatically calculated from tax data in real time — you need to keep it up to date.
You should update your estimate whenever:
- Either partner starts a new job, gets a pay rise, or reduces hours
- You receive a significant bonus, commission, or overtime income
- You sell an investment (shares, property, crypto) that triggers a capital gain
- Your rental property switches from a loss to a profit (or vice versa)
- Either partner starts or stops receiving government payments
- Your family structure changes (separation, new partner)
To update your estimate, log in to myGov, go to your Centrelink account, and navigate to the CCS section. The change usually takes effect within one to two fortnights.
Want to see exactly how your income affects your CCS rate and out-of-pocket costs? Use our free CCS calculator — it applies the exact tapering formula above to give you a personalised estimate in about 2 minutes.