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By Aliss Higham
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Child care has long been one of the most significant expenses for American families—and new research shows just how far out of reach it has become.
New analysis by LendingTree reveals that even households with above-average incomes are struggling to meet the standard for what is considered “affordable” care for their children. While parents across the country feel the pressure of rising prices, the gap between what families earn and what they would need to comfortably pay for child care is so wide that, for many, the idea of affordability is largely theoretical.
"The fact that no group is even remotely near meeting these affordability thresholds tells you an awful lot about the cost of child care — and a lot about these government benchmarks, which clearly need to adjust to the realities of today’s child care costs," Matt Schulz, LendingTree chief consumer finance analyst, said.
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Key Findings
Federal guidelines, set by the U.S. Department of Health and Human Services (HHS), define child care as affordable when it takes up no more than 7 percent of a household’s income. But with the average annual cost of caring for an infant and a 4-year-old now reaching $28,190, the income required to stay within that limit is far beyond what most families earn.
To meet the benchmark, a household with two children would need to earn $402,708 a year, LendingTree reports. But by comparison, the average income for a two-child household is $145,656. That means families would have to earn 176.5 percent more than they do now to meet the federal affordability threshold.
The disparity is even more pronounced when broken down by race, LendingTree found. American Indian households with two children earn an average of $94,094, while Black families earn $98,019. To meet the 7 percent standard, those families would need to increase their earnings by at least 328.0 percent and 310.8 percent, respectively.
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Where the Gap Is Widest
In 20 states, the income required to make child care affordable is at least three times higher than what the average two-child household earns.
In Hawaii, where child care for an infant and a preschooler averages $38,107 per year, families would need to earn $544,386 to keep costs within the 7 percent threshold. That is 269.7 percent more than the state’s average income of $147,249 among households with two children.
Nebraska and Montana follow closely behind. In Nebraska, families would need to earn 263.0 percent more than the current average to meet the benchmark. In Montana, the figure is 257.8 percent.
Even in the states where families come closest to meeting federal guidelines, child care remains out of reach.
South Dakota is the closest to the affordability threshold. There, the average annual child care cost is $16,702. To keep that at 7 percent of income, families would need to earn $238,600—still 95.4 percent more than the state’s average income of $122,100 for households with two children.
Mississippi and Alabama follow, both with gaps of 109.5 percent between what families earn and what they would need to make child care affordable by federal standards.
While these states have lower child care costs than many others, household incomes remain too low to make care truly affordable under the HHS definition.
Free Child Care
For many American families, free child care isn't an option. But the tide is changing in certain places. Starting in November 2025, New Mexico families no longer face income restrictions or co-payments for child care assistance. The change makes the state the first in the country to provide no-cost care to every household, regardless of earnings, and could save families thousands of dollars.
In New York City, Democratic Mayor Zohran Mamdani has pledged to make child care free for families in one of the world's highest-cost-of-living cities.
"After rent, the biggest cost for New York’s working families is child care. It’s literally driving them out of the city: New Yorkers with children under 6 are leaving at double the rate of all others," Mamdani said on his campaign website.
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