In an effort to make child care more affordable, the federal Child Care and Development Fund (CCDF) gives funding to states to provide child care subsidies to families with incomes at or below 85 percent of the state median income. States may also use their own funds to expand subsidy eligibility to more families.
In 2023, Vermont passed Act 76, which gradually expanded child care subsidy eligibility to families with incomes up to 575 percent of the federal poverty level (FPL), thereby extending child care assistance to many families with moderate or higher incomes. For example, a household income of about $172,000 for a family of three in 2024 would be eligible for subsidies.[1] At the same time, families with incomes at or below 175 percent FPL (about $52,000 for a family of three) can receive subsidies and not be required to pay family share payments, effectively eliminating child care costs for the lowest-income households. Families only pay one family share for all the children in their family. Therefore, families with multiple children see especially large cost savings. Along with increasing reimbursement rates for child care providers, these changes aim to increase the availability and affordability of child care in Vermont. Figure 1 (download the full brief to review) provides additional details about policy changes.
These child care policies play a critical role in determining the degree to which care is affordable for families. Understanding how much families pay for child care can help states and territories design family payment structures that balance access to care for families with lower incomes with expanding eligibility to families with higher incomes.
Starting in 2024, Child Trends partnered with Vermont’s Child Development Division (CDD) to explore the effects of these policy changes on families in the state. This brief presents findings from Child Trends’ analysis of CDD data to determine the amount families pay in relation to their gross income—in other words, their child care cost burden. We examined patterns across income groups and analyzed the associated costs to the state.
Key Findings
- The number of Vermont families receiving child care subsidies increased by 55 percent, rising from 5,059 to 7,851 from July 2022 to May 2025.
- From October 2024 to May 2025, Vermont families participating in the subsidy program spent about 5 percent of their income on child care subsidies, but this varied by families’ income.
- Moderate-income families with incomes from 175 to 350 percent of the federal poverty line (FPL) continued to pay a stable amount on child care—about 60 percent of their total child care costs.
- Even with expanded eligibility, most state funding continues to support families with lower incomes.
Footnote
[1] A payroll tax of 0.44% was included in Act 76 to support subsidy expansion.
Suggested citation
Tang, J., Richards, K., Amadon, S., & Banghart, P. (2026). Vermont’s child care subsidy program expands access and reduces cost burden. Child Trends. DOI: 10.56417/7054c161v