Going Back to Work After Parental Leave: What Childcare Will Really Cost
For many parents, the hardest financial moment in the first year after a baby isn't the birth.
It's when parental leave is about to end.
That's when the questions start:
- When should we start childcare?
- How much will childcare actually cost us?
- Is it worth going back to work part-time?
- Will most of my salary disappear into fees?
The challenge is that two major systems begin interacting at this point: parental leave payments winding down and childcare subsidies starting up. Understanding how these work together makes the transition much easier to plan.
What happens when parental leave ends?
Most families move through a similar sequence in the first year.
| Period | What usually happens |
|---|---|
| Birth | One parent stops working |
| Early months | Paid parental leave may apply |
| Later months | Leave payments end |
| Return to work | Childcare begins |
| After childcare starts | Child Care Subsidy reduces fees |
The transition from leave to childcare is often where the household budget changes most significantly. Income may increase when a parent returns to work, but childcare costs appear at the same time — so the two need to be understood together, not separately.
How Government Paid Parental Leave fits into the picture
Many parents receive payments through the Paid Parental Leave (PPL) scheme, administered by Services Australia.
For 2025-26, eligible families can access up to 24 weeks (120 days) of payments. Payments are made at approximately $189.62 per day (based on the National Minimum Wage), or roughly $946 per week before tax.
These payments:
- help replace income while you care for a newborn
- are taxable income — 15% withholding applies by default
- count toward your family's adjusted taxable income for both CCS and FTB purposes
For most households, parental leave payments cover a meaningful part of the leave period — but they typically provide less income than a normal salary. The budget impact of leave ending depends heavily on what childcare looks like next.
When do most families start childcare?
Every family is different, but many parents begin childcare sometime between six and twelve months after a baby is born — often when:
- parental leave finishes or is nearly exhausted
- a parent returns to work part-time to ease the transition
- the household needs a second income again
Some families start with just two or three days per week, then increase hours as work patterns evolve. Others begin full-time care from the outset.
Because childcare costs scale directly with the number of days used, the timing and number of days of care are the most important variables in estimating what you'll actually pay.
How the Child Care Subsidy changes the cost
Childcare fees can look alarming when you first see the advertised daily price — $150 to $200+ per day is common at centre-based services in most capital cities.
But many families receive significant support through the Child Care Subsidy (CCS). The subsidy is paid directly to the approved childcare service and reduces what families are charged.
The amount of subsidy depends on:
- Combined family income — determines your CCS percentage, from 90% for lower-income families down to 0% above ~$536,000
- The provider's hourly fee relative to the government's hourly rate cap (currently $14.63/hr for centre-based day care in 2025-26)
- Number of children in care — a second child under 6 may attract a higher CCS rate
- Subsidised hours entitlement — determined by your activity level (work, study, volunteering)
The actual out-of-pocket cost is often substantially lower than the advertised fee, particularly at lower to middle income levels. Use the CCS calculator to estimate your weekly cost based on your specific income and fees.
Will childcare wipe out my salary?
This is one of the most common fears parents have — and the honest answer is: usually not, but it depends on your numbers.
For most families returning to work at typical Australian salaries, the Child Care Subsidy reduces out-of-pocket costs enough that returning to work produces a net positive household income, even at part-time hours.
That said, the margin varies considerably depending on:
- your family income and resulting CCS rate
- the fees charged by your chosen service
- how many days you work versus how many days your child attends care
- whether you have a second child in care (which can increase the subsidy)
| Work pattern | What usually happens |
|---|---|
| 2–3 days | Lower childcare costs, lower income — often works well for families with higher subsidy rates |
| 3–4 days | More balanced — income usually exceeds childcare cost at most income levels |
| Full-time | Highest income, highest childcare use — net position depends most heavily on fees and CCS rate |
The important thing is that childcare costs and income change at the same time when you adjust your work days. The outcome isn't obvious without modelling both together.
Why small changes in work days matter more than expected
Many parents assume that working one extra day automatically means significantly more household money. In reality, the calculation is more nuanced.
When you add a work day:
- your income increases proportionally
- your childcare days (and costs) typically increase too
- your CCS rate may shift if your estimated annual income changes
- the marginal tax rate on the extra income affects the real take-home amount
The net difference between three and four work days is often smaller than the gross salary difference suggests. Sometimes the fourth day produces a surprisingly small net gain — particularly at income levels where the CCS rate is already tapered.
Equally, some families find the fourth day produces significantly more than expected because it keeps them in a more favourable CCS bracket or crosses a threshold in the activity test entitlement.
This is exactly why comparing return-to-work scenarios side by side — with actual childcare costs and subsidy estimates — is more reliable than back-of-envelope maths.
For a deeper look at the 4th-day question specifically, see Is It Worth Working a 4th Day?.
Why estimating the first year is difficult without a model
The reason many parents struggle to estimate childcare costs is that several things change during the year — often in quick succession.
| Period | Household situation |
|---|---|
| Early months | Parental leave income, no childcare cost |
| Mid-year | One income or reduced income, still no childcare |
| Return to work | Childcare begins, income increases |
| Later months | Stable work and childcare routine |
Looking at a single week or month gives an incomplete picture. A full-year view — income through every phase, childcare starting at the right point, CCS applied to the fees — is what actually tells you whether the transition works financially.
The step-by-step approach to estimating your return
Step 1: Know your leave timeline Add up your employer leave, government PPL weeks, and any unpaid leave. This tells you when income is likely to change and when you might return to work.
Step 2: Estimate your childcare start date When do you plan to start care — week 26 after birth? Week 40? This sets when childcare costs begin in your model.
Step 3: Get a realistic childcare fee Contact local services or use recent fee data. Remember the advertised fee is the gross amount before CCS.
Step 4: Estimate your CCS rate Use the CCS calculator to get an estimate based on your combined household income and the fees at your chosen service.
Step 5: Compare return scenarios Model 3, 4, and 5 days back at work — how does the annual net household income change for each option once childcare costs are factored in?
The PPL Planner is built to do exactly this. It combines leave income modelling with the childcare transition and shows return-to-work scenarios side by side.
What the numbers usually look like
Without knowing your specific income and fees, it is impossible to give a precise figure — but here are some common patterns:
At combined household incomes under $83,280, families receive the maximum CCS rate of 90%, which substantially reduces out-of-pocket costs. Returning to even part-time work is typically financially worthwhile at these income levels.
Between $83,280 and $118,771, the CCS rate tapers from 90% down to 36%. Childcare costs increase as income rises, but net household income generally still increases.
At combined incomes above $118,771, the base CCS rate of 36% applies up to $354,305. At this level, the gap between gross childcare fees and what you actually pay is smaller — and modelling becomes more important.
These thresholds apply to the combined income of both parents, which is why a returning parent's income can shift the subsidy rate significantly.
Frequently asked questions
How do I know how many days to put my child in care?
Most families match care days to work days, but some use slightly more care to allow buffer time for commuting or errands. You only receive the CCS subsidy for hours that align with your approved activity (work, study, etc.) and your subsidised hours entitlement.
What if I go back to work and then decide to change my hours?
You can update your work pattern — and your Centrelink income estimate — at any time. Reducing days means reducing childcare costs but also changing your activity hours entitlement. Increasing days works in reverse. The key is to update your income estimate when your work situation changes to avoid a debt at balancing time.
Can I get the subsidy if I only work part-time?
Yes. The CCS is available to parents working as little as eight hours of recognised activity per fortnight (including work, study, volunteering, training, and certain other activities). The 3-Day Guarantee, introduced in January 2026, also ensures a minimum of 36 subsidised hours per fortnight regardless of activity level, which helps families working minimal hours.
This guide provides general information only. Your actual childcare costs and CCS entitlement depend on your specific income, fees, hours, and circumstances as assessed by Services Australia. For your own estimate, use the CCS calculator or contact Services Australia at 136 150.