Up to $11,400 in Childcare Savings for Families in 2025 Federal Budget: Australia’s 2025 Federal Budget has introduced a game-changing update for families with young children: up to $11,400 in annual childcare savings. This measure is designed to ease the financial burden on families and improve access to early childhood education across the nation. If you’re a parent, caregiver, or professional in the education sector, this is big news—and it’s worth understanding exactly how it could benefit you.
The policy change, announced as part of the government’s broader commitment to education, equity, and social inclusion, particularly helps low- to middle-income families and stay-at-home parents. By removing the activity test, the government has opened the door for more families to access subsidised childcare, regardless of work or study status. This marks a pivotal moment for the childcare sector, with potential ripple effects on workforce participation, gender equality, and early learning outcomes.
Up to $11,400 in Childcare Savings for Families in 2025 Federal Budget
| Feature | Details |
|---|---|
| Maximum Annual Savings | Up to $11,400 per family |
| Effective Date | January 1, 2026 |
| Key Policy Change | Removal of Activity Test for subsidy eligibility |
| Income Eligibility | Families earning under $533,280/year |
| Subsidised Hours | 72 hours per fortnight (minimum), up to 100 hours if other conditions met |
| Applies to | All families using approved childcare services |
| Special Provisions | 100 hours for First Nations families regardless of activity status |
| Official Info | Visit Services Australia |
The 2025 Federal Budget childcare reform is a monumental shift in how Australia supports families and young children. By removing barriers and offering up to $11,400 in annual savings, this policy empowers households, supports parental employment, and strengthens early learning foundations.
For families, the financial relief is immediate and significant. For children, it offers a better start in life. And for the economy, it represents smarter investment in human capital. Whether you’re a working parent, a stay-at-home caregiver, an early childhood educator, or a policy stakeholder, these changes bring widespread benefits that will be felt for generations.
What Is Changing in 2025?
Starting January 1, 2026, the government will remove the activity test that currently determines how many hours of subsidised childcare a family can receive. Today, to get 72 hours of subsidised care per fortnight, both parents (or a single parent) must work, study, or volunteer for at least 16 hours every two weeks. This condition has excluded many families, especially stay-at-home parents, carers, and those working irregular or insecure jobs.
By eliminating the activity test, the new system makes childcare subsidies more accessible, ensuring that children can benefit from quality early education regardless of their family’s employment status. It simplifies access to support and creates a more inclusive childcare environment where financial help is not tied to rigid criteria.
Who Is Eligible?
Eligibility for the new childcare subsidy is straightforward and inclusive:
- Families must have a combined annual income below $533,280.
- Children must be enrolled in an approved childcare service, which includes long day care, family day care, outside school hours care, and some occasional care services.
- No activity requirements are needed for up to 72 hours of subsidised care per fortnight.
Additional benefits apply for:
- First Nations families: Automatically eligible for 100 hours of subsidised care every fortnight.
- Families who still meet the existing activity test can access up to 100 hours per fortnight, providing more flexibility.
You can check your eligibility and apply via Services Australia.
Real-World Example: How Much Can Families Save?
Let’s break it down with some easy-to-understand numbers:
- A family earning $90,000 per year with one child in care three days a week (roughly 30 hours per week) could save around $230 per week, totalling $11,400 per year.
- A family earning $120,000 might save $220 weekly, or $10,630 annually.
- Even a family with a $140,000 income could save $10,110 per year.
These numbers are based on national average childcare fees, estimated at $133 per day for long day care (source: ACECQA). Actual savings may vary depending on location, provider, and hours used, but the policy provides consistent support across different family circumstances.
Why This Matters: Long-Term Benefits for Families and the Economy
This isn’t just about cost-cutting—access to affordable childcare has broader social and economic benefits that touch nearly every aspect of Australian life:
- Improved early childhood outcomes: Children benefit from access to play-based learning environments that enhance language, social, and emotional skills.
- Boosted workforce participation: Especially for mothers and single parents, who often face barriers due to childcare costs.
- Economic growth: A more engaged workforce leads to increased productivity, GDP growth, and lower welfare dependency.
- Support for gender equality: Easier childcare access allows women to return to or remain in the workforce, helping to close the gender pay gap.
Experts from the Grattan Institute, Early Childhood Australia, and the Productivity Commission have long advocated for reforms like these. Their research shows that high-quality early learning and parental workforce participation are crucial levers for national prosperity.
Implementation Timeline and What to Expect
Now until December 2025:
- The current childcare subsidy system remains in effect.
- Families must still meet the activity test to qualify for 72 or more hours of subsidised care.
- Childcare providers will continue billing based on current CCS rules.
From January 1, 2026:
- Activity test is removed for families earning under $533,280.
- Subsidy hours will be recalculated automatically via Centrelink systems.
- No action is needed for families already receiving CCS unless income or circumstances change.
- Families will receive communication from Services Australia about updated entitlements and subsidy changes.
How to Prepare
- Log into MyGov and access your Centrelink account to review your current CCS status.
- Confirm your family income estimate for the 2025-2026 financial year. Accurate estimates help prevent overpayments or debts later.
- Ensure your child is enrolled in an approved childcare provider that is eligible for CCS.
- Notify Centrelink if your employment, income, or household situation changes before 2026.
- Talk to your childcare provider to understand how your bills may change in 2026.
- Stay updated by checking announcements from Services Australia or subscribing to their email notifications.
Government’s Additional Commitments: Building a Stronger Childcare System
In addition to removing the activity test, the government is committing over $1 billion through the Building Early Education and Care Fund. This initiative will tackle regional and socio-economic disparities in childcare access. Key initiatives include:
- New childcare centres in outer suburbs and regional areas where demand exceeds supply.
- Funding for upgrades and expansions to existing services to increase capacity.
- Training and workforce development support for early childhood educators.
- Support for culturally safe and inclusive practices, particularly in Indigenous and linguistically diverse communities.
The goal is to create a system that is universally accessible, sustainable, and responsive to community needs.
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Frequently Asked Questions (FAQs) about Up to $11,400 in Childcare Savings for Families in 2025 Federal Budget
Will I need to reapply for the subsidy in 2026?
No. If you’re already receiving the Child Care Subsidy, your entitlements will be automatically adjusted by Centrelink. You will be notified of any changes.
Does this apply to all childcare services?
Only approved childcare providers are eligible. You can check the full list on Services Australia’s website.
Can higher-income families still get subsidies?
Yes, but only those earning below $533,280 per year are eligible under the new activity test-free provision. Families earning more than this may not qualify for any subsidy.
What if I don’t meet the income threshold now, but do later?
You can update your income details through your MyGov account at any time. Your CCS entitlement will adjust based on your latest income information.
Will I automatically get 100 hours of childcare per fortnight?
No. The base entitlement is 72 hours per fortnight without any activity test. To qualify for up to 100 hours, you will need to meet other criteria, such as being in work or study.
How will I know how much subsidy I’m getting?
You can track your subsidy percentage and entitlements via MyGov. Your childcare provider will also detail this on your invoices.
