CCS hourly rate caps and income thresholds set to rise from 6 July 2026

Early childhood education and care (ECEC) providers and families will see increases to Child Care Subsidy (CCS) hourly rate caps and family income thresholds from 6 July 2026, following the Australian Government's annual indexation process.

The changes, announced by the Department of Education, are linked to movements in the Consumer Price Index (CPI) and are designed to maintain the value of CCS support as living costs continue to rise.

The hourly rate cap is the maximum hourly fee the Government uses to calculate a family's CCS entitlement. Where a service's fees exceed the relevant cap, families are required to pay the difference.

Updated hourly rate caps

The maximum hourly rates that will apply from 6 July 2026 are:

The updated caps apply to first children in care. Separate rates apply for second and younger children where relevant.

Family income thresholds also increasing

Family income thresholds used to determine CCS eligibility and subsidy rates will also increase from 6 July 2026.

Under the revised arrangements:

• families earning up to $88,520 will be eligible for a 90 per cent subsidy
• families earning more than $88,520 and below $538,520 will receive a subsidy that gradually reduces from 90 per cent to zero
• the subsidy rate decreases by 1 percentage point for every $5,000 of additional family income
• families earning $538,520 or more will not be eligible for CCS.

A family's subsidy rate is applied to the hourly rate cap or the service's actual hourly fee, whichever is lower.

Implications for services and families

For providers, the updated caps may influence fee-setting decisions and discussions with families about affordability and out-of-pocket costs.

Services charging fees above the hourly rate cap may see families paying a larger gap fee, particularly where fee increases outpace annual indexation adjustments.

For families, the higher income thresholds may help maintain eligibility levels and subsidy rates as household incomes rise, while the increased hourly caps may provide some additional support towards the cost of care.

The annual adjustments form part of the Australian Government's ongoing administration of the CCS system, which remains the primary mechanism for reducing out-of-pocket childcare costs and supporting workforce participation.

Further information about CCS hourly rate caps, including rates for second and younger children, and family entitlement calculations is available from the Department of Education.