Employer-paid childcare benefits above $7,500 are taxable to you. See below how that affects your personal financial situation.
Taxes, Medicaid, and other government assistance.
To be eligible, both parents have to work and each earn at least $7,500 — or be a full-time student or unable to care for themselves. And even if you're eligible, there are cases where you're better off not taking the exemption. The calculator above runs that analysis for you.
Nice — the hard part’s done. Sign in to pick your childcare provider, confirm your details, and start putting your benefit to work.
Sign in to your accountYou might be one conversation away. Most employers don’t know this benefit exists — or that between credits and deductions, it can cost them close to nothing. Here’s how to bring it up.
Heads up: this page is general education, not tax, legal, or benefits advice. Everyone's numbers are different. Before you change anything, check with your plan administrator, a free benefits navigator, or your own CPA. (We're CPAs — we're allowed to say that.)
Quick rule: tax-free childcare benefits don't count as income. The taxable part does, but only if it pushes you past the lines below. Here are the 2026 New York limits, straight from NY State of Health.
Adults 19–64, up to 138% of the federal poverty level.
| Household size | Annual income limit |
|---|---|
| 1 | $22,025 |
| 2 | $29,864 |
| 3 | $37,702 |
| 4 | $45,540 |
| 5 | $53,379 |
| 6 | $61,217 |
| 7 | $69,056 |
| 8 | $76,894 |
Each additional person: +$7,839. Kids qualify up to 154% FPL; pregnant women and infants up to 223% FPL.
Coverage for kids under 19 — eligible up to 400% of the federal poverty level.
| Household size | Annual income limit |
|---|---|
| 1 | $63,840 |
| 2 | $86,560 |
| 3 | $109,280 |
| 4 | $132,000 |
| 5 | $154,720 |
| 6 | $177,440 |
| 7 | $200,160 |
| 8 | $222,880 |
Each additional person: +$22,720. Free below 222% FPL; small monthly premiums ($15–$60 per child) above that, up to the 400% limit shown.
$0-premium coverage for adults 19–64 who earn a bit too much for Medicaid — up to 200% FPL.
| Household size | Annual income limit |
|---|---|
| 1 | $31,920 |
| 2 | $43,280 |
| 3 | $54,640 |
| 4 | $66,000 |
| 5 | $77,360 |
| 6 | $88,720 |
| 7 | $100,080 |
| 8 | $111,440 |
Each additional person: +$11,360. Reflects the 200% FPL limit effective July 1, 2026.
Source: NY State of Health, 2026 Income Levels for Medicaid, Child Health Plus & Essential Plan. Not in New York? Your state's Marketplace has the same kind of chart. General info — for your case, talk to a free benefits navigator.
Short answer: it doesn’t. Even if your employer-paid childcare gets counted as income, SNAP and federal housing both let you deduct that same childcare cost right back out — because that’s exactly what it is. Money in, childcare out, net zero.
Counted in as income for childcare, deducted right back out as childcare. Your countable income lands exactly where it started — no net change.
SNAP (food assistance): childcare you need for work, training, or school is deductible with no dollar cap — and the rules are explicit that any amount counted as income gets deducted right back out. 7 CFR § 273.9(d)(4)
Federal housing (Section 8 & public housing): childcare for kids under 13 that you need for work or school is a deduction from your annual income. 24 CFR § 5.611
WIC: rides on SNAP. If you qualify for SNAP, you’re automatically income-eligible for WIC — no separate income test. 7 CFR § 246.7(d)(2)(vi)
Medicaid: no childcare deduction here — see the Medicaid box above for those income lines.
General information, not advice — program rules vary by state and situation. Federal regulations current as of 2026.
This is a normal thing to bring up — you’re not asking for a handout. After credits and deductions, this benefit costs your employer close to nothing. Good for you, good for them.
It barely costs them. A federal credit covers up to 40–50% of what they spend, the rest is deductible, and New York adds a state credit on top. Between all three, they can get back everything they put in — sometimes more.
It keeps good people. Childcare is a top reason parents cut hours or quit. Usually cheaper than a raise.
It’s almost no work for them. Perquity runs enrollment, provider payments, and the tax paperwork. They mostly just say yes.
Hi [name] — I came across something I thought was worth a quick look. There’s a new federal tax credit (plus a NYS one) that lets employers help with employees’ childcare and get almost all of it back at tax time, so it’s not a net expense for the company. A company called Perquity handles all the setup, payments, and paperwork, so it’s almost no new headache or admin burden for the company. It’s something I’d really value, and I figured it couldn’t hurt to bring it up. Would you be open to taking a look? Their site is perquity.com.
Send it to whoever controls the budget — owner, HR, or office manager. Keep it low-pressure; you’re sharing an idea, not making a demand. You don’t have to explain the tax side — that’s what Perquity is for.
General information, not tax or legal advice. Actual credit amounts depend on your employer’s situation — Perquity (and their CPA) can run the real numbers.