2021 Child and Dependent Care Credit
For 2021, the Child and Dependent Care Credit is 50% (Maximum rate), $8,000 (Expense limit, one person) and $16,000 (Expense limit, two or more people).
Effective 2021-01-01Source: Publication 503 (2021), Child and Dependent Care Expenses (IRS)Verified 2026-08-29
Compared with 2020
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Maximum rate | 35% | 50% | +15% (+42.9%) |
| Expense limit, one person | $3,000 | $8,000 | +$5,000 (+166.7%) |
| Expense limit, two or more people | $6,000 | $16,000 | +$10,000 (+166.7%) |
Who it applies to
Taxpayers who paid for the care of a qualifying person so they could work or look for work in 2021.
What changed this year, and why
The American Rescue Plan Act temporarily expanded the child and dependent care credit for 2021, raising the expense limits and the maximum credit percentage, and making the credit refundable for qualifying taxpayers.
Common questions
- What changed for 2021 compared with earlier years?
- The American Rescue Plan Act raised the expense limits to $8,000 for one qualifying person and $16,000 for two or more, and raised the maximum credit rate to 50%. These changes apply only for 2021.
- Does the credit phase out for higher earners?
- Yes. For 2021, the maximum 50% rate applies to taxpayers with adjusted gross income at or below a specified threshold. Above that threshold, the rate decreases as income rises until it reaches zero.
- Is the credit refundable?
- For 2021 only, the credit can be refundable for taxpayers who maintained a principal home in the United States for more than half the year.
The credit cannot exceed what you earned
For the 2021 Child and Dependent Care Credit, the work-related expenses a taxpayer can count are limited by earned income. A single taxpayer is limited to his or her own earned income for the year. A married taxpayer is limited to the smaller of either spouse's earned income for the year, using the spouse's full-year amount even if the marriage lasted only part of the year. This cap sits on top of the dollar limits of $8,000 for one qualifying person or $16,000 for two or more qualifying persons. A special rule prevents the limit from collapsing to zero when a spouse has little or no actual earnings: a spouse who is a full-time student or who is physically or mentally unable to care for himself or herself is treated as having earned income for each month the condition applies, so the credit can still be calculated. The 2021 maximum credit rate is 50% applied to the qualifying expenses after all limits are applied.
Earned Income Limit The amount of work-related expenses you use to figure your credit can't be more than: 1. Your earned income for the year if you are single at the end of the year, or 2. The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Earned income for the purpose of figuring the credit is defined under You Must Have Earned Income, earlier. For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year.
Publication 503 (2021), Child and Dependent Care Expenses (IRS)
The exception for a student or disabled spouse
For the 2021 Child and Dependent Care Credit, the work-related expenses you can count are limited by the taxpayer's earned income. A single taxpayer cannot use more than his or her own earned income for the year. A married taxpayer cannot use more than the smaller of either spouse's earned income for the year. This earned-income cap applies on top of the dollar limit of $8,000 for one qualifying person or $16,000 for two or more qualifying persons. If one spouse has little or no earned income, the credit may be reduced or eliminated. However, a special rule prevents this outcome when a spouse is a full-time student or is physically or mentally unable to care for himself or herself. In that case, the nonworking spouse is treated as having earned income for each month the condition applies. This rule applies to only one spouse in any given month. The rule applies whether you are the nonworking spouse or your spouse is, as long as you file a joint return.
Rule for student-spouse or spouse not able to care for self. Your spouse is treated as having earned income for any month that he or she is: 1. A full-time student, or 2. Physically or mentally not able to care for himself or herself. (Your spouse must also live with you for more than half the year.) If you are filing a joint return, this rule also applies to you. You can be treated as having earned income for any month you are a full-time student or not able to care for yourself.
Publication 503 (2021), Child and Dependent Care Expenses (IRS)
Married couples generally must file jointly
For the 2021 Child and Dependent Care Credit, married taxpayers generally must file a joint return to claim the credit. The filing status may be single, head of household, or qualifying widow(er) with dependent child. If the taxpayer is married at the end of the year, a joint return is required unless an exception applies. The exceptions are described in the What's Your Filing Status section of the publication and include certain separated spouses who may qualify as unmarried. A taxpayer who is married but files separately cannot take the credit. The joint return requirement is one of several tests that must all be satisfied before the credit is allowed. The credit rate for 2021 is 50%, and the expense limits are $8,000 for one qualifying person or $16,000 for two or more qualifying persons, both subject to reduction for employer-provided benefits and to the earned income limit.
5. Joint Return Test. Your filing status may be single, head of household, or qualifying widow(er) with de- pendent child. If you are married, you must file a joint return, unless an exception applies to you. See What’s Your Filing Status, later.
Publication 503 (2021), Child and Dependent Care Expenses (IRS)
You must name the provider, or show due diligence
To claim the 2021 Child and Dependent Care Credit, the taxpayer must identify all persons or organizations that provided care for the qualifying child or dependent. The information is reported on Form 2441, Part I. For each care provider, the taxpayer must give the provider's name, address, and taxpayer identification number. If the provider is an individual, the taxpayer identification number is the social security number or individual taxpayer identification number. If the provider is an organization, it is the employer identification number. A tax-exempt organization such as a church or school does not require a taxpayer identification number; instead, the taxpayer enters "Tax-Exempt" in the space on the form. If the taxpayer cannot provide all of the required information or the information is incorrect, the taxpayer must be able to show that due diligence was used in trying to obtain the information. Failure to identify the care provider or to show due diligence may result in disallowance of the credit. The credit rate for 2021 is 50%, applied to expenses up to $8,000 for one qualifying person or $16,000 for two or more qualifying persons.
Care Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Use Form 2441, Part I, to show the information. If you don't have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” on line 1, column (a). Information needed. To identify the care provider, you must give the provider's: 1. Name, 2. Address, and 3. Taxpayer identification number.
Publication 503 (2021), Child and Dependent Care Expenses (IRS)
Employer benefits shrink the expense limit
If a taxpayer received dependent care benefits from an employer that are excluded or deducted from income, those benefits reduce the dollar limit for work-related expenses used to figure the 2021 Child and Dependent Care Credit. The reduced dollar limit is calculated on Form 2441, Part III. The excluded or deducted benefit amount is subtracted from the dollar limit that otherwise applies. For one qualifying person, the limit before reduction is $8,000; for two or more qualifying persons, it is $16,000. The taxpayer can then use only the reduced limit of work-related expenses to figure the credit, even if actual expenses paid were higher. The credit rate for 2021 is 50%, applied to qualifying expenses after all limits are applied, including this reduction for employer-provided benefits. The reduced dollar limit operates in addition to the earned income limit, which separately caps expenses at the taxpayer's earned income or, if married, the smaller of either spouse's earned income.
Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Your re- duced dollar limit is figured on Form 2441, Part III. See Dependent Care Benefits, earlier, for information on ex- cluding or deducting these benefits.
Publication 503 (2021), Child and Dependent Care Expenses (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 503 (2021), Child and Dependent Care Expenses (IRS)
- Maximum rate
The maximum credit in 2021 in- creases to 50% of your employment-related expenses
- Expense limit, one person
For 2021, you may claim the credit on qualifying employment-related expenses of up to $8,000 (previously $3,000) if you had one qualifying person
- Expense limit, two or more people
or $16,000 (previously $6,000) if you had two or more qualifying persons