CCS Income Thresholds and Percentage Steps: 2025–26
Your Child Care Subsidy percentage is the single most important number in your childcare budget. It determines what share of your fees the government covers — and it changes as your income changes. This guide explains exactly how the percentage is calculated, what each income band means in dollar terms, and the situations where crossing a threshold has a larger impact than families expect.
The basics: how your CCS percentage is set
Your CCS percentage is based on your combined family Adjusted Taxable Income (ATI) for the financial year. It is not based on your salary alone — ATI includes rental income, investment income, reportable fringe benefits from salary packaging, and capital gains. See What Is Adjusted Taxable Income? for the full list of what counts.
For 2025–26, the standard CCS percentage works as follows:
- Families with ATI up to $85,279 receive the maximum rate of 90%
- Above $85,279, the rate reduces by 1 percentage point for every $5,000 of additional income
- At $535,279 and above, the rate reaches 0% and CCS stops entirely
The rate applies to your fees up to the CCS hourly cap. If your provider charges above the cap, CCS applies to the capped amount only — not your actual fee.
The full threshold table: 2025–26
| Combined family ATI | CCS percentage |
|---|---|
| Up to $85,279 | 90% |
| $85,280 – $90,279 | 89% |
| $90,280 – $95,279 | 88% |
| $95,280 – $100,279 | 87% |
| $100,280 – $105,279 | 86% |
| $105,280 – $110,279 | 85% |
| $110,280 – $115,279 | 84% |
| $115,280 – $120,279 | 83% |
| $120,280 – $125,279 | 82% |
| $125,280 – $130,279 | 81% |
| $130,280 – $135,279 | 80% |
| $135,280 – $140,279 | 79% |
| $140,280 – $145,279 | 78% |
| $145,280 – $150,279 | 77% |
| $150,280 – $160,279 | 76% |
| $160,280 – $170,279 | 75% |
| $170,280 – $180,279 | 74% |
| $180,280 – $190,279 | 73% |
| $190,280 – $200,279 | 72% |
| $200,280 – $210,279 | 71% |
| $210,280 – $220,279 | 70% |
| $220,280 – $230,279 | 69% |
| $230,280 – $240,279 | 68% |
| $240,280 – $250,279 | 67% |
| $250,280 – $260,279 | 66% |
| $260,280 – $270,279 | 65% |
| $270,280 – $280,279 | 64% |
| $280,280 – $290,279 | 63% |
| $290,280 – $300,279 | 62% |
| $300,280 – $350,279 | 61%–51% |
| $350,280 – $400,279 | 51%–41% |
| $400,280 – $450,279 | 41%–31% |
| $450,280 – $500,279 | 31%–21% |
| $500,280 – $535,279 | 20%–13% |
| $535,280 and above | 0% |
Thresholds are indexed annually each July. These figures apply to the 2025–26 financial year.
What a 1% change actually means in dollars
The taper looks gentle on paper — 1 percentage point per $5,000 of income. But the dollar impact depends on how much care you use.
Example: family using 4 days/week at $140/day
Weekly fees: $560 (assuming fees within the hourly cap)
| CCS percentage | Weekly subsidy | Weekly gap |
|---|---|---|
| 90% | $504 | $56 |
| 85% | $476 | $84 |
| 80% | $448 | $112 |
| 75% | $420 | $140 |
| 70% | $392 | $168 |
| 65% | $364 | $196 |
Each 5 percentage point drop (i.e. $25,000 of additional income) increases the weekly gap by $28. Over a full year of care (48 weeks), that is $1,344 per 5 percentage points.
For families using 5 days/week or paying higher fees, the dollar impact per percentage point is larger. For families using 2–3 days, it is smaller. The CCS Checker models this for your specific situation.
[[CHECKER:income]]
Why crossing a threshold mid-year matters
Your CCS percentage is not locked in for the year — it is based on the income estimate you have on file with Centrelink. When you update your estimate, the new percentage applies from the next CCS fortnight.
This creates two important dynamics:
1. Moving up a band (income rises): If your income increases and you update your estimate, your CCS percentage falls immediately for future payments. Weeks already paid at the higher rate are not recalculated during the year — they are reconciled at balancing. If your actual income ends up higher than your estimate, the difference is settled as a debt.
2. Moving down a band (income falls): If your income falls and you update your estimate, your CCS percentage rises and you receive more subsidy from the point of update. You will not be back-paid for the period before you updated — but you will receive a top-up at balancing if your actual income ends up lower than the estimate used.
This is why updating your income estimate promptly in both directions matters. See When to Update Your CCS Details.
The $85,279 threshold: why it feels different
The transition from below $85,279 to above it is the one threshold that produces the largest psychological impact, even though the mechanical change is small (one percentage point, from 90% to 89%).
The reason it feels significant is that it marks the end of the maximum rate zone. Below $85,279, every family receives 90% regardless of where exactly they sit. Above it, every additional dollar of income reduces the rate. Families who have been on 90% for years and receive a pay rise that takes them above this threshold often notice the change immediately on their statements.
In practical terms, crossing this threshold on a typical 4-day care arrangement costs approximately $5–6 per week extra. It is meaningful but not large. The larger impacts come from accumulating multiple threshold crossings — for example, a pay rise plus a bonus in the same year can move a family through several bands at once.
The second child higher rate
If you have more than one child in approved care and at least one child is under 6, the second and subsequent younger children receive a higher CCS rate. The higher rate is either:
- 95%, or
- Your standard rate plus 30 percentage points
whichever is lower.
This means a family on 80% standard CCS receives 95% for their second child under 6 (80 + 30 = 110%, capped at 95%). A family on 70% receives 95% (70 + 30 = 100%, capped at 95%). A family on 68% receives 95% (68 + 30 = 98%, capped at 95%).
The higher rate stops when the child turns 6. This is one of the most significant CCS changes a family experiences — a sudden jump in weekly costs with no income change. See Higher CCS Rate for Second Child and CCS Cliffs Explained.
How ATI differs from taxable income
Many families underestimate their CCS band because they calculate from their salary rather than their ATI. ATI is higher than taxable income for families with:
- Salary packaging or novated leases — reportable fringe benefits are added back to ATI even though they reduce taxable income
- Rental properties — net rental income (after expenses) is included
- Investment portfolios — dividends, including grossed-up franking credits, count
- Capital gains — gains from shares or property sales count in the year of sale
A family whose salary is $170,000 combined but who also has $20,000 of net rental income and $10,000 of reportable fringe benefits has an ATI of approximately $200,000 — which puts them on 72% CCS rather than the 74% their salary alone would suggest.
See What Is Adjusted Taxable Income? for a full breakdown.
Thresholds are indexed annually
The income thresholds change each July when they are indexed to wage growth. The 2025–26 thresholds above will be replaced by new figures from 1 July 2026. The structure (90% maximum, 1% per $5,000 taper, 0% cutout) stays the same — only the dollar values shift.
This indexation means a family whose income stays flat in nominal terms may move to a slightly higher CCS percentage each year as the thresholds rise around them.
Key takeaways
- CCS ranges from 0% to 90% based on combined family ATI, tapering by 1 percentage point per $5,000 above $85,279
- ATI includes more than salary — rental income, investment income, reportable fringe benefits, and capital gains all count
- Each 5 percentage point change costs or saves approximately $28/week for a family using 4 days of care at $140/day
- The second child under 6 higher rate (up to 95%) operates independently of the income taper
- Thresholds are indexed each July — the 2025–26 figures apply until 30 June 2026
- Crossing a threshold mid-year affects future payments; past payments are reconciled at balancing
Frequently Asked Questions
My income is right on the $85,279 threshold — which rate do I get?
At exactly $85,279, you receive 90%. The taper begins above this figure. If your ATI is $85,280, you are in the 89% band.
My income changes month to month. How do I set my income estimate?
Use your best projection of total family ATI for the full financial year. Update it when you have better information. If your income is genuinely unpredictable, a conservative (slightly higher) estimate reduces the risk of a balancing debt. See CCS for Small Business Owners and Sole Traders.
Does my CCS percentage change automatically when I get a pay rise?
No. Your percentage changes when you update your income estimate in myGov. Centrelink does not automatically detect pay rises. If you receive a pay rise and don't update your estimate, you may accumulate an overpayment that becomes a balancing debt.
Can I be on different CCS percentages for different children?
Yes — the first child receives the standard rate for your income band. A second child under 6 receives the higher rate (up to 95%). If you have a third child, that child also receives the higher rate while under 6.
What happens to my CCS percentage when the financial year ends?
Your percentage resets for the new financial year based on the income estimate you provide for that year. If you do not update your estimate, Centrelink may carry forward the previous year's estimate or contact you to confirm.
This is general guidance only. Thresholds are indexed annually — verify current rates via myGov or Services Australia at 136 150. Visit servicesaustralia.gov.au/child-care-subsidy.