What is the hourly rate cap?
The Child Care Subsidy works as a percentage of your hourly fee. But there is an upper limit. The government won't subsidise an unlimited hourly fee, only up to a fixed cap.
If your centre charges more than the cap, you pay the full difference, regardless of your CCS percentage. This is the "gap fee" you'll often hear about.
The 2025-26 caps
The hourly rate caps are indexed annually based on the Consumer Price Index. The current caps (effective 7 July 2025) are:
- Centre-based day care (under school age): $14.63 per hour
- Family day care: $13.56 per hour
- Outside school hours care (school age): $12.81 per hour
- In-home care: $39.80 per hour per family
How the cap affects what you pay
An example. Say your CCS percentage is 85% (which is what a family earning around $90,000 receives). Your centre charges $16 per hour for a child under school age.
- The first $14.63 of the hourly fee is subject to your subsidy: 85% of $14.63 = $12.44 subsidy
- You pay the gap on that hour: $14.63 minus $12.44 = $2.19
- Plus you pay the full amount above the cap: $16 minus $14.63 = $1.37
- Your total out-of-pocket per hour: $3.56
For a 10-hour day, that's $35.60 per day out of pocket, on a $160 daily fee.
Why this matters when comparing centres
Most Sydney centres charge above the hourly rate cap. The amount they charge above the cap is the "premium" you pay regardless of your subsidy. So when comparing two centres:
- Centre A charges $14.50 per hour. Below the cap. Your subsidy applies to the full fee.
- Centre B charges $18.00 per hour. Above the cap. The first $14.63 is subsidised. You pay the full $3.37 above the cap, on top of your gap on the subsidised portion.
The headline daily fees might look comparable, but the after-CCS difference can be substantial. This is why "premium" centres can have a much bigger out-of-pocket gap than the sticker price suggests.
Will the cap go up?
The hourly rate caps are indexed annually based on CPI, with changes taking effect at the start of the new financial year (early July). So the caps go up most years.
However, in recent years, real childcare fees have risen faster than CPI. So even though the caps go up, the gap between fee and cap also tends to widen, meaning out-of-pocket costs can drift up year over year.
Useful resources
- Services Australia: how much CCS you can get
- CCS gap fee calculator on this site
- Full CCS explainer on this site