How the Child and Dependent Care Credit can cut summer camp costs in 2025

USA Today

7 days ago

Return-to-office mandates often trigger a return to big bills for summer day camps. So, it doesn't hurt to take a refresher course now on how one decent tax break can help save families a few bucks.
Many parents might not realize it, but you can get a bit of relief from the high cost of day care bills and summer day camps paid in 2025 when you file your tax return next year.
What is the Child and Dependent Care Credit?
The Child and Dependent Care Credit applies to children who are younger than 13 when the day care is provided. You'd complete Form 2441 to calculate the credit and file the form along with your 1040 federal income tax return. Taxpayers also can review IRS Publication 503 for rules.
"Summer day camp expense can be claimed only if the care was necessary for the taxpayer to do work or to look for work," said Brandon Nishnick, manager for tax practice and ethics for the American Institute of CPAs.
"The primary purpose must be for child care and the camp must be a daytime-only program," he said.
Expenses associated with sending children to an overnight camp would not qualify.
Typically, you're able to recoup only a small portion of your costs. Yet, no one should leave money on the table and ignore the credit if they qualify to claim it.
"In general, to qualify, parents must work or be full-time students and use a day care, summer camp, or another program while they work and the provider must have a Social Security Number or Federal Identification Number that will be needed to apply for the tax credit," said Mark Steber, chief tax officer for Jackson Hewitt Tax Services.
How do you calculate the tax credit for summer camps?
The Child and Dependent Care Credit is calculated as a percentage of your qualifying expenses, which ranges from 20% to 35%, depending on your adjusted gross income, according to Nishnick.
If a taxpayer has a qualifying child under the age of 13, typically they can claim up to $3,000 in eligible care expenses or $6,000 for two or more children.
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The maximum credit ends up being up to $1,050 for some taxpayers with one child or dependent. And it can be as high as $2,100 for some taxpayers with two or more children or dependents. Or it can be much less than that.
How much you'd save in taxes would vary based on your income and your expenses. The value of the credit declines as your income goes up.
Consider this example: Take someone who has two children under 13. Say they spend $8,000 in the year for care expenses. Only $6,000 is eligible in this case to be taken into account as an expense for the credit.
If your adjusted gross income is $45,000, you would receive a credit of $1,200, which is 20% of the $6,000 in eligible expenses, Nishnick said.
Again, expenses must be associated with what you'd pay for care during the time you went to work or were looking for work. We're not talking about what you'd pay a sitter on the weekend to go out to a concert.
In order to go to the office or work site, many parents must arrange for care, and paying for the child to attend a day camp program is one such option.
Make sure to keep detailed records now
"As a credit, it is a dollar-for-dollar reduction in tax owed," said Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting in Riverwoods, Illinois.
The credit is a nonrefundable tax credit on 2025 returns that can reduce the amount of income tax you owe. But Luscombe noted there is no credit to the extent that no tax is owed. It won't generate an additional refund if your tax liability for the year is less than the credit amount.
What you want to do now is keep good, detailed records of your child care expenses, including the camp expenses and provider information if related to a summer camp.
The biggest mistake that parents make, some experts said, is failing to keep records of child care during the year, including amounts paid and the address and Taxpayer Identification Number of the summer camp or child care provider.
Nishnick said parents should take time now to ensure that their care provider is eligible if they plan to claim the credit.
"They cannot be your spouse, the child's parent, a dependent, or a relative under the age of 19. The care provider must be properly documented with a name, address and taxpayer ID," Nishnick said.
And don't expect to get any credit for an overnight camp. "For example, if the parent works a third shift or overnight such as in a hospital, these costs for an overnight camp would still not qualify," Nishnick said.
Your child's age at the time the care is provided remains a key factor.
"The care must be for a child who is under the age of 13 at the time the care is provided," Nishnick stressed. "For example, if the child turns 14 the second day of summer camp, then the remainder of those expenses would not qualify."
Unfortunately, Steber said, parents often overlook or forget to claim the Child and Dependent Care Credit. Or some try to claim ineligible expenses toward the credit.
Some parents, of course, have been able to work remotely in previous summers since the COVID-19 pandemic hit in 2020.
Yet, we're continuing to hear about more return-to-office initiatives. Ford Motor, for example, announced in June that the automaker is calling the majority of its salaried workforce back to the office four days a week, effective Sept. 1.
More families could be juggling more child care expenses and might want to brush up on available tax breaks.
The Child and Dependent Card Tax Credit can work whether you itemize deductions or claim the standard deduction.
Make no mistake, the rules as they are right now are complicated.
"The credit is calculated based on your income and a percentage of expenses that you incur for the care of qualifying persons to enable you to go to work, look for work, or attend school," according to the Internal Revenue Service.
Currently, Luscombe noted the credit phases down from 35% of expenses for taxpayers with an adjusted gross income of $15,000 or less to 20% of expenses with up to $43,000 in AGI. It never falls below 20%.
The total expenses that you may use to calculate the credit may not be more than $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals.
If you use a flexible spending account at work, though, you're not going to be able to claim what you spent out of that account.
If you saved $1,000 in a flexible spending account and used that money toward day care or summer day camp expenses, for example, you could calculate the dependent care credit based on up to $2,000 in expenses for one child.
The IRS has an online tool that can help you run some numbers to see whether you qualify to claim the Child and Dependent Care Credit.
Who qualifies? It's not just expenses for children.
"A qualifying person generally is a dependent under the age of 13, a spouse or dependent of any age who is incapable of self-care and who lives with you for more than half of the year," the IRS states online.
Some tax rule changes could be ahead
Going forward, some changes in the child and dependent care credit could be ahead for 2026 expenses.
On July 1, the U.S. Senate narrowly approved tax-and-spending legislation that President Donald Trump calls "One, big, beautiful bill." The package went to the U.S. House, where it passed July 3. It was being sent to Trump to be signed into law.
The Senate reconciliation bill includes a proposal to increase the maximum rate to 50% from 35% of qualifying expenses for lower-income families. Luscombe noted that this change is proposed to be effective starting in 2026.
Garrett Watson, director of policy analysis at the nonpartisan Tax Foundation, said a broader range of households would see a higher credit value for eligible dependent care expenses on their tax return under the Senate version.
The 50% credit rate would phase down for taxpayers with adjusted gross income over $15,000.
For example, the percentage used to calculate the credit could be reduced from the new 50% mark by 1 percentage point, but not below 35%, for each $2,000 that the taxpayer's AGI exceeds $15,000.
The percentage would then be further reduced, but not below 20%, by 1 percentage point for each $2,000 ($4,000 for joint returns) that their AGI exceeds $75,000 ($150,000 for joint returns).
Watson noted that the Senate proposal was scored by the Joint Committee on Taxation, a nonpartisan government agency, as costing about $9.3 billion over 10 years.
Contact personal finance columnist Susan Tompor: [e-mail]. Follow her on X @tompor.