2025–26 Child Care Subsidy changes: What families, centre managers and providers need to know

The 2025–26 CCS changes take effect from 7 July. While these annual adjustments are intended to reflect cost of living increases, they often cause confusion for families. Here is how approved providers and centre managers can support clearer conversations with families about the upcoming changes.

 

From 7 July 2025, the Child Care Subsidy (CCS) will be updated to reflect rising costs, with changes to both the maximum hourly subsidy rate and the income thresholds that determine eligibility.

 

For centre managers, approved providers and families, understanding and clearly communicating these updates can reduce confusion, strengthen trust and help avoid difficult conversations about fees.

 

What is changing in 2025–26?

 

The maximum hourly subsidy rate (or ‘rate cap’) is increasing across all care types. This is the maximum hourly fee the Government will subsidise.

 

 

Family income thresholds are also changing:

 

• Families earning up to $85,279 will receive the maximum CCS rate of 90 per cent
• Families earning more than $85,279 to below $535,279 will see their CCS rate reduce by 1 per cent for every $5,000 earned
• Families earning $535,279 or more will receive no CCS

 

These thresholds are reviewed annually in line with the Consumer Price Index (CPI).

 

Why your fees might still rise

 

A common concern among families is: “If the subsidy has increased, why are we paying more?”

 

The answer lies in how CCS is calculated. The subsidy applies to the lower of either the service’s hourly fee or the Government’s hourly cap.

 

If a service charges above the capped rate, the family pays the difference regardless of their subsidy percentage. This means that even when CCS increases slightly, families may still experience higher out of pocket costs if the service raises its daily fee.

 

Example: A family with 85 per cent CCS pays $22.50 out of pocket on a $150 daily fee. If that fee increases to $155, and the hourly cap only rises slightly, the family may pay more even though their subsidy rate remains the same.

 

What providers and leaders can do to support families

 

1. Communicate early

 

Ensure families are informed of upcoming fee increases and CCS changes before 7 July. Use clear language and allow sufficient time to ask questions.

 

2. Use real world examples

 

Demonstrate how a typical family within a common income bracket may be affected, presenting both best and worst case scenarios to support understanding

 

3. Highlight support for families with more than one child

 

Families with more than one child aged five or under in care may be eligible for a higher CCS rate for younger children, up to 95 per cent for families earning up to $143,273. This benefit applies even if the children attend different services.

 

4. Explain how activity levels affect CCS hours

 

A family’s level of recognised activity (work, study, volunteering) determines how many hours of subsidised care they can access. Services Australia uses the parent with the lowest activity level to assess CCS hours.

 

 

For Aboriginal and Torres Strait Islander children, families receive at least 36 hours of CCS per fortnight, regardless of activity level. Additional hours may apply based on recognised activity.

 

5. Link to trusted tools

 

Families can estimate their CCS entitlements using the Starting Blocks CCS calculator, or update their details via MyGov.

 

What approved providers can do to assist

 

Approved providers may wish to:

 

• Update enrolment packs, policy documents and fee communication templates
• Supply FAQs or example scripts to centre managers for consistency
• Offer optional information sessions for families prior to  7 July

 

Final tips for clear communication

 

• Avoid jargon. Use terms like “subsidy amount the Government will cover” instead of “rate cap”
• Be empathetic. Recognise that financial changes can be stressful
• Stay values based. Emphasise how fees contribute to quality education, safe environments and educator wellbeing
• Provide support. Encourage families to speak with admin or accounts staff if they require understanding the changes

 

Clear, consistent, kind

 

CCS changes are routine, but they can create uncertainty for families. With clear, early and supportive communication, services can help families understand what is changing, what it means for them, and how to plan ahead with confidence.

 

For full details about the 2025–26 changes, visit Services Australia’s CCS information page.

 

Guidance from ACECQA regarding service fees is available here.