Most parents know the Child Care Subsidy reduces their childcare fees, but fewer know that there’s a ceiling on exactly how much the government will subsidise, and if your centre charges above it, you pay the difference with no government help at all.
That ceiling is called the child care subsidy hourly rate cap, and it increased in July 2026. If your gap fee looks different to last year, this is likely part of the reason. Here’s what changed, how it affects your fees, and what to check before you enrol again.
What Is the Child Care Subsidy Hourly Rate Cap?
The CCS hourly rate cap is the maximum hourly fee that the Australian Government will apply your subsidy percentage against. It is not a cap on what childcare centres can charge. Centres set their own fees based on staffing costs, location and demand. The cap simply sets the upper limit on what the subsidy will cover.
If your centre’s hourly fee sits at or below the cap, your CCS percentage applies to the full fee. If your centre charges above the cap, CCS applies only up to the capped amount; any fee above that line comes entirely out of your pocket on top of your regular child care gap fee.
The caps are indexed to the Consumer Price Index each July, which is why childcare costs often shift around the same time every year.
What Changed in July 2026?
From 6 July 2026, the confirmed 2026-27 hourly rate caps increased across all care types.
Here’s the full comparison:
| Care Type | Age Band | 2025–26 Cap | 2026–27 Cap | Change |
|---|---|---|---|---|
|
Centre-Based Day Care |
Under school age | $14.63/hr | $15.19/hr | $0.56 |
|
Centre-Based Day Care |
School age | $12.81/hr | $13.30/hr | $0.49 |
|
Family Day Care |
All ages | $13.77/hr | $14.08/hr | $0.31 |
|
Outside School Hours Care |
School age | $12.81/hr | $13.30/hr | $0.49 |
|
In Home Care |
Per family | $40.40/hr | $41.31/hr | $0.91 |
The cap for long-day care children under school age, the most common care type for families at Rise & Shine, increased by $0.56 per hour. The national average long-day care fee is around $14.40 per hour, which sits below the new cap. For most families at centres charging around the national average, CCS applies to the full fee.
However, centre fees vary significantly by location. Inner-city centres in Sydney, Melbourne and Brisbane regularly charge above the cap, so plenty of Australian families end up paying those above-cap costs.
How the Child Care Gap Fee Is Calculated
This is where it helps to see a worked example.
Say your centre charges $16.00 per hour for a child under school age, and your CCS rate is 85%:
The 2026-27 hourly cap for centre-based day care (under school age) is $15.19. CCS is calculated on $15.19, not the full $16.00 your centre charges.
Government subsidy: 85% of $15.19 = $12.91 per hour
Your gap on the capped amount: $15.19 – $12.91 = $2.28 per hour
Your above-cap amount: $16.00 – $15.19 = $0.81 per hour (no subsidy applies here)
Total out of pocket: $3.09 per hour
Across a standard 10-hour day, that’s $30.90. Across four care days a week and 48 weeks a year, the difference between a centre charging at the cap versus $1 above it adds up to over $1,900 annually. It’s a detail that’s easy to overlook when you’re comparing daily child care gap fees at a glance.
Why Do Some Centres Charge Above the Cap?
The hourly rate cap doesn’t tell you anything about quality; it simply sets where the subsidy stops.Centres charge above the cap for legitimate reasons, such as higher staffing costs, smaller ratios, better facilities and programs or a pricier location.
From late 2024 to November 2026, the government funded a 15% wage increase for early childhood educators through the Worker Retention Payment. Most centres that took up the grant passed this cost through to fees.
A separate Fair Work Commission award increase also took effect in March 2026. Both changes contributed to the fee rises that many families noticed this year.
When comparing centres, ask for the equivalent hourly rate (divide the daily fee by the number of session hours) and compare it to the 2026-27 cap for your care type. Any amount above $15.19 per hour for under-school-age long-day care is fully unsubsidised.
What About QLD Kindy Families?
If your child is in kindy and you’re in Queensland, Free Kindy provides an additional layer of relief.
Kindy subsidies in QLD cover the approved kindergarten program portion of your remaining fee after CCS has been applied. So even if your centre charges above the hourly cap, Free Kindy can reduce what’s left during the funded program weeks.
Our school readiness program for preschoolers and kindergarten children at Rise & Shine is delivered through a QLD-approved kindy program, meaning eligible families can access Free Kindy on top of CCS throughout the kindy year.
How to Check What You’re Really Paying
The best time to work out how the child care subsidy hourly rate cap affects your family is before you enrol, not after your first statement arrives.
Ask your centre to confirm their hourly rate, compare it to the 2026-27 cap for your care type, then use our CCS gap fee calculator to run your own numbers.
If you’d rather talk it through, contact Rise & Shine Kindergarten and our team will walk you through exactly what your family would pay at our centres.
