She budgeted for the baby.
She and her partner had spent months building the spreadsheet. They had accounted for the lost income during her maternity leave, the cost of the new furniture, the car seat and the stroller and the various pieces of equipment that the parenting literature had insisted were essential and that she had quietly decided were optional until she discovered they were not. She had done the math on the crib, on the formula if breastfeeding did not work, on the paediatrician visits and the hospital bills and the newborn photography that she had also quietly decided was optional until she saw the photos from her colleague's session and decided it was not.
She had budgeted for the baby. What she had not budgeted for was the system.
The system is what surrounds the baby and makes caring for it possible: the childcare infrastructure, the healthcare infrastructure, the leave infrastructure, and the legal and financial architecture that determines how much of the cost of having a child is borne by the family and how much by the society. In the United States, that architecture is notable primarily for how much of the cost it transfers to individual families and how little it provides in the way of structural support. The result is a financial experience of new parenthood that is, for a growing number of families, one of the most significant economic events of their lives — and one for which they were almost entirely unprepared.
The number that anchors everything
The estimated cost of raising a child to age 18 in the United States, in average cost-of-living areas, before college. In high-cost states, the figure is significantly higher. And it begins before the child is born.
The cost before the baby arrives
The financial experience of having a child in America begins not at birth but at conception, with the prenatal care that the medical system recommends and that the insurance system covers incompletely and inconsistently.
A standard course of prenatal care — the visits, the blood work, the ultrasounds, the screenings, and the consultations recommended over the course of a healthy pregnancy — costs between $2,000 and $4,000 in out-of-pocket expenses for insured patients, after deductibles, copays, and the specific coverage gaps that vary by plan and by provider. For uninsured patients, the cost is considerably higher and the barriers to access considerably greater, with consequences for maternal health outcomes that the research documents consistently and that the healthcare system has proven consistently inadequate to address.
The birth itself represents a significant additional cost. The Peterson-KFF Health System Tracker analysis of pregnancy, childbirth, and postpartum costs found that the average out-of-pocket cost for a vaginal delivery for commercially insured patients in the United States is approximately $2,655, with the cost of a caesarean delivery averaging $3,214. These are out-of-pocket figures for people who have insurance. For the 40% of US births covered by Medicaid — the largest single payer of maternity care in the country — the cost to the family is substantially lower, which is precisely why proposed Medicaid cuts represent such a significant threat to the financial and physical wellbeing of the families who depend on the programme.
The surprise costs of hospital birth — the anaesthesiologist who turns out to be out of network, the neonatal specialist who is present at the delivery without the parents' knowledge or prior consent to the billing, the NICU stay that no one planned for — these are not edge cases. They are common enough that the Consumer Financial Protection Bureau has documented surprise billing in maternity care as one of the most significant unresolved consumer protection issues in the healthcare system, and has flagged it as a significant driver of medical debt among new parents.
The leave that isn't: what parental leave actually costs in America
The United States is one of the only developed nations in the world without a federal paid parental leave policy. The Family and Medical Leave Act guarantees 12 weeks of unpaid, job-protected leave for eligible employees at companies with 50 or more employees. The word unpaid is doing significant work in that sentence.
Approximately 40% of the American workforce does not qualify for FMLA protections at all — either because their employer is too small, because they have not been employed long enough, or because they do not work sufficient hours to meet the eligibility threshold. Of the workers who do qualify, many cannot afford to take the full 12 weeks without pay. The National Partnership for Women and Families has documented that the workers least able to afford unpaid leave are disproportionately women and disproportionately mothers.
Several states have implemented paid family leave programmes that provide partial wage replacement during parental leave. California, New Jersey, New York, Washington, Massachusetts, Colorado, Connecticut, Oregon, Delaware, Maryland, Minnesota, and the District of Columbia all have state-level paid family leave programmes. The National Conference of State Legislatures maintains a current database of state-level paid leave policies, including eligibility requirements, benefit amounts, and duration. For families in states with paid leave programmes, the financial reality of the leave period is meaningfully different from the national average. For families in states without them, the cost of taking any leave at all is borne almost entirely by the family itself.
The financial cost of taking unpaid leave, beyond the immediate income loss, includes a compounding effect on long-term earnings documented in the Bankrate Motherhood Penalty Study: women who take career gaps or reductions in the early years of parenting earn significantly less over the course of their careers than comparable women who do not — a gap that widens with every year of reduced earnings, and that the research puts at approximately $600,000 over a 30-year career.
The first year: where the budget breaks
The financial shock of the first year of parenthood is concentrated most acutely in childcare, which is the largest single discretionary expense for most families with young children and the one for which the financial system offers the least adequate support.
The St. Louis Federal Reserve's analysis of childcare costs and economic impact puts the average annual cost of center-based childcare in the United States at $9,200 per child per year — already above the 7% affordability threshold set by the Department of Health and Human Services for families earning below $131,000. The American Enterprise Institute's 2025 childcare affordability report found that infant centre-based care in California averages $19,547 per year, New York averages $19,584 per year, and Massachusetts reaches $20,913 annually. (We traced how infant care came to cost more than college tuition in a separate piece.)
The affordability standard set by the US Department of Health and Human Services defines childcare as affordable when it costs no more than 7% of family income. In California, New York, and Massachusetts, the threshold income required to keep childcare affordable at the 7% standard exceeds $280,000 per year — a figure that places genuinely affordable childcare out of reach for the vast majority of families in those states, including dual-income professional households.
For families with two children in care simultaneously, the arithmetic becomes genuinely untenable. Two children in full-time centre-based care in New York costs an average of approximately $39,000 per year, before any other household expense. Set against a median household income of approximately $76,000 in New York State, this represents more than 50% of gross household income — before tax, housing, food, or anything else. It is not a meaningful choice for most families. It is the arithmetic of an impossible situation, and it is the same dysfunction that turned the childcare cliff into a permanent plateau.
The tax benefits that exist — and what they actually cover
The federal tax system provides several mechanisms for reducing the effective cost of childcare and early parenting expenses. None of them comes close to bridging the gap between what families pay and what a genuinely supportive system would provide, but all of them are worth understanding and using fully.
The Child Tax Credit
The Child Tax Credit provides up to $2,000 per qualifying child under the age of 17 for the 2025 tax year, with up to $1,700 refundable for eligible families. Income phase-outs begin at $200,000 for single filers and $400,000 for married filing jointly.
The Dependent Care Flexible Spending Account
Employer-sponsored Dependent Care FSAs allow eligible employees to contribute up to $5,000 per household per year in pre-tax dollars for qualifying childcare expenses. At a 22% federal tax bracket, a fully funded DCFSA reduces the effective cost of childcare by roughly $1,100 per year.
The Child and Dependent Care Tax Credit
Even without an employer-sponsored FSA, families can claim a credit of between 20% and 35% of qualifying childcare expenses, on up to $3,000 in care costs for one child or $6,000 for two or more children. At maximum, this credit reduces federal tax liability by $600 for one child or $1,200 for two or more. IRS Publication 503 covers the eligibility rules in full. It is not refundable for most families, meaning it reduces taxes owed but does not generate a refund if it exceeds tax liability.
Together, the maximum federal tax benefits available to a family with two children in childcare amount to approximately $2,300 per year. The average annual cost of care for two children in a mid-cost state is approximately $18,400. The gap between the support available and the cost incurred is $16,100 per year, per family — before accounting for geographic variation or the cost of the parental leave that the federal system does not support.
The long-term financial picture
The Bankrate Motherhood Penalty Study puts the total cost of raising a child to age 18 in the United States at approximately $322,427 in average cost-of-living areas. In high cost-of-living areas, the figure is significantly higher. And this figure does not include the cost of college, which the College Board's Trends in College Pricing and Student Aid 2025 report estimates at an additional $29,910 to $62,570 per year in total cost of attendance depending on institution type and location — adding $120,000 to $250,000 or more over a four-year degree.
Nor does the $322,427 figure include the opportunity cost of the motherhood penalty: the estimated $600,000 in lifetime earnings that the Bankrate Motherhood Penalty Study finds full-time working mothers lose relative to fathers over a 30-year career — a gap that widened to 35% in 2024. When the direct costs of raising a child and the indirect costs of the earnings gap that parenthood imposes on mothers are considered together, the total financial impact of having a child for an American mother approaches or exceeds $1 million over a career and a childhood combined.
This is not an argument against having children. It is an argument for honesty about what having children in America actually costs, and for the policy changes that would make that cost more equitable and more bearable. The countries where the financial experience of new parenthood is materially less burdensome — the Scandinavian countries, Germany, Canada, the United Kingdom — have achieved that outcome through specific policy choices: paid parental leave, subsidised childcare, universal healthcare coverage for pregnancy and birth. The United States has not made those choices. The financial experience of American families with young children is the direct consequence of not having made them.
What to do in the system that exists
While the structural changes that would meaningfully address this financial reality continue to be advocated for, there are practical steps families can take to navigate the current system as effectively as possible.
Maximise every available tax benefit. Fully fund your Dependent Care FSA if your employer offers one. Claim the Child and Dependent Care Tax Credit. Apply for the Child Tax Credit. Use the IRS VITA programme for free tax preparation assistance if your income qualifies. These benefits exist, and they are underutilised.
Research your state's specific programmes. Many states offer childcare subsidy programmes, paid family leave insurance, state-level child tax credits, and home visiting programmes that are not widely advertised and are significantly underutilised. The Benefits.gov database lets you search by state and life situation for programmes you may not know you qualify for. (For a fuller walkthrough, see our guide to accessing every financial benefit available to new mothers.)
Apply for WIC if you qualify. The Special Supplemental Nutrition Programme for Women, Infants and Children provides food assistance to pregnant women, breastfeeding women, and children under five who meet income guidelines. Benefits include supplemental food packages, breastfeeding support, and referrals to health services. If your income qualifies, enrol — the food benefits alone are meaningful, and the support services are valuable. (Note that proposed cuts to WIC may change what the programme covers.)
Understand your rights under FMLA and state leave laws. The Department of Labor's FMLA resources and your state's Department of Labor provide guidance on what leave you are entitled to and under what conditions. Knowing your rights before you need them changes the quality of the conversation you can have with your employer. The National Partnership for Women and Families also maintains state-by-state paid leave research for families wanting to understand what their state currently offers.
She budgeted for the baby
She budgeted for the baby. The system was not in the spreadsheet. The hospital bill that arrived six weeks after the birth with an out-of-network charge she had not consented to was not in the spreadsheet. The childcare waitlist that meant she was paying a holding deposit on a spot she would not be able to use for seven months was not in the spreadsheet. The leave she could not take the full length of, because the unpaid portion was not financeable at that moment in their lives, was not in the spreadsheet.
She managed. Most families manage. Managing is not the same as thriving, and it is not the same as having a system that works, and it is not the same as living in a society that has decided the financial reality of having children is a shared responsibility rather than a private one.
She budgeted for the baby. The baby is fine. The system is not.
Frequently asked questions
How much does it cost to have a baby in America in 2026?
The costs stack up across several categories. Prenatal care runs roughly $2,000–$4,000 out of pocket for insured patients; a vaginal delivery averages about $2,655 out of pocket and a caesarean about $3,214 for commercially insured patients, per the Peterson-KFF Health System Tracker. The first year is then dominated by childcare, which averages about $9,200 per child nationally and approaches $20,000 per child in high-cost states. The Bankrate Motherhood Penalty Study puts the total cost of raising a child to age 18 at roughly $322,427 before college.
Does insurance cover the full cost of childbirth?
No. Even for commercially insured patients, deductibles, copays, and coverage gaps leave thousands in out-of-pocket costs, and surprise out-of-network charges — an anaesthesiologist, a neonatal specialist, a NICU stay — are common enough that the Consumer Financial Protection Bureau treats maternity surprise billing as a major driver of medical debt. Medicaid, which covers about 40% of US births, leaves families with substantially lower costs, which is why proposed Medicaid cuts are a significant financial threat.
Is paid parental leave guaranteed in the United States?
There is no federal paid parental leave. The Family and Medical Leave Act guarantees up to 12 weeks of unpaid, job-protected leave for eligible employees at companies with 50 or more employees — and roughly 40% of the workforce doesn't qualify at all. A growing number of states (including California, New York, New Jersey, Washington, and Massachusetts) run their own paid family leave programmes; the National Conference of State Legislatures keeps a current database of them.
What tax benefits help with the cost of a baby?
Three main federal mechanisms: the Child Tax Credit (up to $2,000 per qualifying child under 17, up to $1,700 refundable); the Dependent Care FSA (up to $5,000 pre-tax per household for qualifying childcare); and the Child and Dependent Care Tax Credit (20–35% of up to $3,000 in care costs for one child or $6,000 for two or more). For a family with two children in care, these total roughly $2,300 a year against an average care bill near $18,400 — a gap of about $16,100.
Why is childcare so expensive relative to family income?
Quality care for infants requires a high ratio of trained adults to children, which makes labour costs structurally high, while the families paying for it are budget-constrained. Without public subsidy, the price required to pay workers adequately and the price families can afford are incompatible. Countries with affordable childcare — France, Sweden, Denmark — bridge that gap with public funding rather than market competition. The US largely treats childcare as a private cost, which is why it consumes such a large share of family income.
