A typical week for Diana Carter, a 34-year-old entrepreneur with three kids based in Charlotte, North Carolina, and her husband, involves coordinating day care drop-offs and pick-ups for their middle child.

But that’s just the tip of the iceberg: They also homeschool their oldest son and have family stop by multiple times weekly to help care for their youngest child, among other caregiving and household responsibilities.

If juggling that wasn’t enough, the cost of child care constantly looms over their heads. Carter and her husband pay $315 per month for part-time day care for one of their daughters and anticipate that figure growing to $570 per month once their youngest begins attending a half-day program at their church’s preschool.

In total, Carter says they’ve spent more than $7,000 on child care over the last five years. Full-time child care would be so expensive for them that it may not make financial sense to pay for it, she says. In that scenario, she would consider becoming a full-time caregiver.

“If we were to put our children in full-time child care, we would have to take a serious look at our budget and consider whether it would make sense for me to take a step back from my career,” she says.

Child care has become one of the biggest expenses for parents no matter where they live in the country. A new Bankrate analysis finds that full-time center-based care for one infant costs at least 10% of a typical family’s annual income in 48 states and the District of Columbia.

In some states, like New York and Hawaii, infant care costs can take up roughly 20% of a typical family’s yearly income. And some of the more affordable states in the country, such as New Mexico and Kansas, are surprisingly expensive when it comes to infant care.

Our findings pull back the curtain on infant care costs across the U.S., revealing where they’re the most and least affordable. Whether you live in a higher- or lower-cost state for infant care, our analysis suggests there are ways for parents across the country to cope with exorbitant child care prices.

Infant care costs are high no matter where families live in the U.S.

To gauge child care affordability across the U.S., Bankrate looked at the percentage of annual median income spent on full-time center-based infant care for one child in 2023. The data for the analysis came from the U.S. Census Bureau and Child Care Aware of America, a national nonprofit that works with state and local Child Care Resource and Referral agencies. We also compared the national average price of infant care to other big expenses in a typical family’s budget, using data from the BLS’ 2023 Consumer Expenditures Survey.

The average cost of full-time center-based care for one infant in the U.S. was $14,070 in 2023, according to Child Care Aware of America estimates. That’s more than a household’s average annual budget for food ($9,985 per year), health care ($6,159 per year) and transportation ($13,174 per year), according to our study. The only expense that cost more for households on average is housing ($25,436 per year).

Nationally, $14,070 per year for one infant in full-time center-based care is equivalent to a monthly average of $1,173. According to U.S. Census Bureau data, a family with children under 18 years old in the U.S. earned an annual median income of $95,721 in 2023. That means it would take 14.7% of a family’s median income to afford that national average price tag, though the cost varies widely by state and locality, according to our analysis.

According to an analysis by the Center of American Progress, child care is generally most expensive for infants and toddlers and gradually decreases as children age. However, it can vary widely depending on the type of child care provider, the age and number of children in a household and where families live.

Average prices for full-time center-based infant care range widely across all 50 states, including the District of Columbia, from $7,862 to $25,480 annually. This shows that the high cost of child care affects parents across state lines, forcing many to get creative with their budgets, withdraw from their savings, or take a step back from their careers.

Working mothers tend to feel more of the financial impact of high child care costs than their male counterparts because they’re more likely to reduce their hours, take lower-paying jobs or leave the workforce to accommodate for caregiving. Bankrate’s Motherhood Penalty Study found full-time working mothers earned 31% less in wages than full-time working fathers in 2023. If that wage gap remained the same over 30 years, those lost wages could add up to roughly half a million for working mothers.

In almost half of U.S. states (24 states), the percentage of family income spent on infant care is higher than the national percentage (14.7%). Twenty-seven states have a percentage of family income spent on infant care that is the same or lower than the national percentage.

The experts we spoke to explained that significant regional differences in child care costs across the country are likely due to variations in the cost of living, local child care supply and demand and local labor forces.

“In most cases, that is driven by regional variations and local labor markets,” says Elliot Haspel, a child and family policy expert and author of “Crawling Behind: America’s Child Care Crisis and How to Fix It.” “I think it’s fair to say that in no state in America is child care broadly affordable, accessible and abundant.”

Sandra Bishop, senior director of research at Child Care Aware of America, says 70% to 80% of the cost of child care is due to staff costs because providers need high ratios of adults to children for basic health and safety reasons. At the same time, child care workers earn low wages, leading to broader staffing shortages and frequent turnover in the industry, Bishop says. A recent analysis by the Federal Reserve Bank of Chicago found that the median wage paid to childcare workers is in the bottom 5% of all occupations.

“We’re basically subsidizing the system on their [workers’] backs,” Bishop says. “That’s the dilemma.”

While child care providers nationwide are struggling to keep their doors open, many parents can’t afford to pay more. The end of September 2024 marked one year since COVID-19 federal funding for day care providers ended, which left many families scrambling to find affordable child care. Additionally, child care costs have risen exponentially over the last three decades, over 1.5 times faster than overall inflation since January 1991, according to Bankrate’s analysis of BLS data.

5 least affordable states for infant care

—New Mexico, 20.5%

—Hawaii, 20.1%

—New York, 19.6%

—California, 18.7%

—Massachusetts, 18.4%

New Mexico is the least affordable state for infant care, with the highest percentage of income needed for child care for one infant (20.5%). Last year, families with children under 18 earned a median income of $65,952, and full-time center-based child care for one infant cost an average of $13,521.

The average cost of infant child care isn’t significantly higher in New Mexico compared to other states, but families in New Mexico earn a relatively low median income, resulting in a higher percentage of family income allocated to child care.

Despite being ranked No. 1 for the least affordable, New Mexico is one of the few states that widely supports subsidized child care and has tried to make child care accessible for most families. In 2022, New Mexico dramatically expanded its state child care subsidy program by doubling eligibility for families, from two times (200%) to four times (400%) the federal poverty line, according to a statement from New Mexico’s governor’s office. That means a family of four earning up to $124,800 annually can qualify for free child care, making thousands more families eligible.

Hawaii, New York, California and Massachusetts round out the top five states where families spend the highest percentage of their incomes on infant child care. A typical family spends at least 18% or more of their income on infant care in those states.

In addition to New Mexico, some of the country’s more affordable states are also some of the least affordable states for full-time center-based infant care. In Kansas and Minnesota, for example, the average cost of care for one infant represents between 16.6% and 17.3% of each state’s median family income annually.

New Mexico isn’t the only state trying to bring child care costs down for families. Other states and cities have followed New Mexico’s lead, recently enacting policy reforms to make affordable child care more accessible to families in their communities.

5 most affordable states for infant care

—South Dakota, 8.7%

—North Dakota, 9.8%

—Utah, 10.3%

—Idaho, 10.9%

—South Carolina, 11.2%

In parts of the country with more affordable child care, like South Dakota, North Dakota and Utah, a typical family spends closer to 10% of their income on infant care.

South Dakota is the most affordable state for infant care, with the lowest percentage of family income spent on child care for one infant (8.7%). In South Dakota last year, families with children under 18 earned a median income of $90,343 annually, and child care for one infant cost $7,862 on average.

While average infant care is more affordable for the typical family in South Dakota compared with the rest of the country, 2023 research from the nonprofit ReadyNation found that the state’s current child care system falls short on accessibility and quality.

According to ReadyNation’s report, nearly half (43%) of South Dakotans live in a child care “desert,” with more than three children under age 5 for each available slot at licensed child care providers. Additionally, South Dakota has the most lenient licensing threshold of any state in the country: An in-home child care provider can have up to 12 children before they are required to register with the state.

Data from Early Learner South Dakota shows only 22% of providers were licensed or registered with the state as of 2019, so the quality of care received by many children in South Dakota is largely unknown.

North Dakota, Utah, Idaho and South Carolina round out the bottom five states where families spend the lowest percentage of their incomes on infant child care. Like South Dakota, South Carolina, Utah and Idaho have a higher concentration of child care deserts, making it more difficult for families to find high-quality child care that fits within their budgets, according to the Center for American Progress. It can cost a typical family between 9.8% and 11.2% of their income for infant care in those states.

How parents can cope with high child care costs

Child care costs can put a significant financial strain on a family — especially for today’s parents who were hit with the COVID-19 recession, high inflation and high interest rates in recent years. To manage high child care costs, consider taking these steps:

Look up your financial assistance and resources in your state

Child Care Resource and Referral agencies provide one-on-one help to families to find out more about child care in their areas. Whether you’re looking for referrals to local child care providers or information on where to get help paying for child care, this state-by-state child care resource database by Child Care Aware of America can point you in the right direction.

Compare child care options in your area

Get recommendations from parents in your area, tour day care facilities and get multiple quotes for child care providers near you to ensure you’re getting the best quality care at a price that fits within your budget. It’s important to be proactive about finding child care that you can afford, as day care waitlists can sometimes be several months long.

Claim tax credits for dependents

You may be able to offset your care costs for this year or next by claiming the child tax credit and the child and dependent care credit. The child tax credit is a $2,000 benefit available for parents with dependent children under 17. The child and dependent care credit allows parents to deduct a percentage of paid expenses for the care of a qualifying individual up to $3,000 ($6,000 for two people). In addition to federal tax credits, some states including California, Colorado and New York offer state-level child tax credits that you may be eligible for.

Automate your finances

Parents are busy, which is why it’s important for them to automate their finances as much as possible. Set up automatic contributions to a retirement account and high-yield savings account, and use a budgeting app or spreadsheet that allows you to easily track your spending on a weekly and monthly basis.

Start saving early

If you plan to have a family but are still a few years away, CFP Robin Snell recommends getting a headstart on saving for child care expenses.

“For most people, it’s kind of a scramble,” she says. “The more you can plan for child care costs, the better.”

One of Snell’s top tips is setting up a split direct deposit, so part of your paycheck goes to a high-yield savings account and part of it funnels to a checking account to cover your necessary and discretionary expenses. She says that accomplishes two things: You’ll know when your budget starts to feel tight in your checking account, and it prevents you from not paying yourself first.

CFPs typically recommend having multiple savings accounts for different financial goals: an emergency fund, a “fun” fund, a down payment fund, a child care fund or more. To keep your savings on autopilot, set up monthly automatic contributions to your other savings accounts in addition to a split direct deposit.

Check your flexible spending account (FSA)

You may have access to an FSA as part of your employee’s benefits package, and certain types can be used to offset child care expenses. With a dependent care FSA, you or your spouse can fund it throughout the year and use those pre-tax funds to reimburse your child care costs.

This helps reduce your income, which is subject to taxes. You can contribute up to $5,000 per household or $2,500 for married couples filing separately per year, but you have to use those funds before the end of the year, or you’ll lose them.

“Every dollar helps to reduce that income,” CFP Julie Jenkins says.

Get creative with your budget

According to Jenkins, pricey child care will likely require parents to get creative with their budgets and cut back on spending. That could mean canceling a few monthly subscriptions, buying more affordable second-hand clothes or tailoring your grocery shopping list to what’s on sale.

“Families have to budget and make some room for the child care because it’s a weight on them,” she says. “Know what your goals and values are for budgeting to ensure that what you’re spending truly aligns with your values.”

Methodology

Bankrate’s Cost of Infant Care Study examines where households are most financially burdened by child care in the U.S. Using 2023 data from Child Care Aware of America and the U.S. Census Bureau, we analyzed average child care prices for full-time infant-based centers for one child (including the District of Columbia) and compared them to statewide median incomes of families with children under 18 years old to determine the percentage of family income spent on child care annually in every state. Average child care prices for 2023 were derived from Child Care Aware of America’s January 2024 survey and state market rate surveys. Median income data for families with children under 18 were derived from the U.S. Census Bureau’s 2023 American Community Survey. We also analyzed the Bureau of Labor Statistics’ 2023 Consumer Expenditures Survey to compare the national average cost of child care to housing, food, transportation and health care costs in the U.S. Limited data were available on median income for families with younger children. We used the median incomes of families with children under 18 years old from each state, given that, on a national level, there was little difference between those income levels and national incomes for parents of children younger than 6 years old. In this study, any reference to “child care” or “child care costs” refers to the cost of care for one infant. Child care costs can vary substantially based on the type of child care provider, age and number of children in a household and geographic location. Child care for infants is typically the costliest across various age groups, and care in a center may be more expensive than care in a home-based setting. In our ranking, one means most affordable for infant care, and 51 means least affordable for infant care.

©2024 Bankrate.com. Distributed by Tribune Content Agency, LLC.