If you're a parent, you're probably wondering: How much does it cost to raise a child per year in 2023? The following is a break down how much it costs in each state so you can plan the cost of child care this year.
2023 yearly amount cost per child
Average cost of child care is $12,415.31 per year per child. If you’re a planner like me then you want to know so you can fit it all in and not stress about it. The USDA compiles an annual report on child expenses to help families prepare their budgets. State governments and courts also use the information in drafting child support and foster care guidelines. The main expenses include housing, food, transportation, health care, education, clothing, and miscellaneous costs.
Child Care Cost for Each State
|State||2023 Child Care Costs|
|District of Columbia||$26,352.14|
Cost of living has been increased across the board not just the cost of child care. Read more about cost of rent in 2023 here.
How much does each child cost in 2023?
The cost of raising a child is nearly $13k a year for the average family. While this amount seems high, it actually varies greatly. While families in the urban areas spent the most money, rural households spent less money on raising a child. In rural areas, families spent about two-thirds of the cost of raising a child. This difference is largely due to lower housing costs and lower expenses associated with child care.
The cost of raising a child per year varies greatly depending on the region you live in, the number of children in the family, and the income of the parents. If the parents have more money, they may choose to have two children instead of one. Children can be expensive if parents have different incomes, so it is important to plan ahead. Families with lower incomes may choose to have fewer children.
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Are child care costs tax deductible?
Yes. Talk to your accountant. You may qualify for a tax credit on your taxes of up to 35% of qualifying expenses of $3,000 ($1,050) for each child or dependent.
Why is child care cost skyrocketing?
The cost of raising a child has been increasing in recent years, inflation being a huge variable that seems to be affecting parents especially in 2023. Take a look at google trends data showing how many parents are searching the term suggesting to me that parents are wondering why child care is going up so much this year.
How to get tax breaks for hiring your child.
You can hire your child under the age of 18. Why? Lowering taxes. Let's break this down. You can pay your child $12,950 in 2023 and simply put, they won't pay taxes. You can even take it a step farther and potentially deduct the child's wage as a business expense. Be sure to talk with your accountant on how to work out these details. Remember that the rich do everything possible to minimize the amount they pay in taxes and so can you.
Ideas on How to afford child care
While it's not easy to afford child care, many families are struggling to make ends meet.
- Ask your employer about their benefits package for parents, such as adoption assistance, pre-tax transportation plans, and educational assistance.
- Join or create a babysitting co-op.
- Split a babysitter or nanny with another family.
If you have other creative ways to save on child care costs please list them below and I'll update the blog.