Home daycare tax deductions

A family child care home can deduct part of the cost of the home it works in, the food it serves to the children, and the supplies it uses. This page walks through the three biggest pieces. It is a record-keeping guide, not tax advice: check IRS Publication 587 for the year you file, or ask a tax professional.

1. The Time-Space percentage

A home daycare usually shares rooms with the family. That is allowed: daycare is an exception to the rule that a home office must be used only for business, as long as you are licensed, registered or approved as a provider (or exempt under state law) and use the space regularly for daycare.

Space percentage. The square feet you use for daycare divided by the total square feet of the home.

Time percentage. The hours the space is used for daycare divided by the hours in the year (8,760 in a year that is not a leap year). Count the hours children are there and the hours you spend on daycare work in the home, such as cleaning and preparing meals.

Time-Space percentage. Multiply the two. You apply it to indirect home expenses such as rent or mortgage interest, utilities, insurance and repairs, on Form 8829.

For example, 40% of the home is used for daycare, 2,500 hours a year. Time 28.54% × space 40% = 11.42%.

Our free Time-Space calculator does this from your rooms and hours.

2. The simplified method

Instead of Form 8829 you can use the simplified method: $5 per square foot for up to 300 square feet. If the space is used regularly but not only for daycare, reduce the $5 rate by the share of time the space is used for daycare. It is simpler, but often smaller than the Time-Space method for a home daycare that uses a large part of the house.

3. Food for the children

You can deduct food for eligible children at actual cost, or use the standard meal and snack rates instead of keeping receipts: for 2026, $1.70 for breakfast, $3.22 for lunch or dinner and $0.96 for a snack in the 48 states, with higher rates in Alaska, Hawaii and the territories. Count at most one breakfast, one lunch, one dinner and three snacks per eligible child per day, and use one method for all the year's food. See the full rate table.

4. Supplies and other direct costs

Supplies used for the daycare, such as art materials, toys, cleaning supplies and paper goods, are business expenses on Schedule C. Items used by both the daycare and your family are split by the Time-Space percentage. Keep receipts and note what each purchase was for.

Keep the records in one place

The Home Daycare Bookkeeping Bundle is four spreadsheets for Google Sheets and Excel: a Time-Space calculator with a shared expense sheet, an expense tracker by category, an attendance and meal log that totals the year at the standard meal rates, and tuition statements for parents.

Parents will ask for a statement of what they paid in January. Make a free year-end tuition statement.

This is a record-keeping guide, not tax advice. Check IRS Publication 587 for the year you are filing or ask a tax professional.