On May 12, 2026, the U.S. Department of Health and Human Services’ Administration for Children and Families (ACF) announced changes to the Child Care and Development Fund (CCDF), the primary federal program that helps low-income families afford child care and supports child care quality nationwide. The 2026 CCDF Final Rule follows a notice of public rulemaking process and public comment period that received 998 comments from state agencies, members of Congress, advocacy organizations, early childhood educators, parents, labor unions, and members of the public, including NAEYC and many of our partners.  

The final rule rescinds a March 2024 requirement that states implement four specific policy changes designed to support the stability of providers serving families relying on child care subsidies, maximize families’ options, and reduce costs for families. States still retain the flexibility to implement the following policies under the rule change, but are no longer required to implement the following policies:  

1. Cap family copayments to 7% of family income. States must still ensure that copayments cannot be a barrier to families receiving child care assistance, as required by the Child Care and Development Block Grant Act (CCDBG), and states are still required to demonstrate in their CCDF Plan how their copayments are based on a sliding fee scale.  

2. Provide some direct services through grants or contracts. States must still describe strategies to increase the supply and improve the quality of child care services for children in underserved areas, infants and toddlers, children with disabilities, and children who receive care during nontraditional hours, as required by CCDBG.  

3. Pay child care providers prospectively. States must still ensure that child care providers are paid in a timely manner, as required by CCDBG.  

4. Pay providers based on a child’s authorized enrollment. States must still delink payments from occasional absences, to the extent practicable, as required by CCDBG.  

The changes included in the final rule take effect July 13, 2026. The full rule can be found in the Federal Register.   

Implications for Providers and Families

By rescinding the 2024 CCDF rule, the Administration risks making it harder for families to access affordable child care options, reducing the supply of providers who serve infants, toddlers, and children with disabilities and destabilizing programs participating in the subsidy system.  

Risks making child care even more expensive and difficult to access for families relying on subsidy

Families who receive child care assistance often still have to pay a copayment in order to leverage subsidy dollars. Recognizing that higher costs for families create barriers to participating in the system, the 2024 rule pushed states to cap copayments at 7 percent of family income, a mark that most states have since achieved. Amidst broader economic challenges, providers are reporting that families’ challenges affording tuition are increasing across programs, and that those struggles are having an impact on enrollment. If states were to roll back protections around copayment caps, it could negatively impact families’ abilities to participate in the subsidy system.   

Risks worsening supply shortage especially for families with infants, toddlers, children with disabilities, and rural communities

Providing grants and contracts to child care programs is a proven strategy for states to increase slots for populations with additional barriers to child care access including infants, toddlers, children with disabilities, and those in rural communities. According to NAEYC’s 2026 ECE Workforce Survey, 73 percent of child care directors and administrators indicated they’d be more likely to accept families with subsidies if they could receive grants and contracts to serve infants and toddlers and children with disabilities. While states can still leverage grants and contracts to support these populations, doing so creates additional complexities for program administration, and absent the requirement to do so, we are likely to see reduced take-up, negatively impacting supply for families who most need it.  

Potentially creates more instability for child care programs, threatening their ability to keep their doors open

Aligned with commonly used payment practices of private pay families, the 2024 rule was aimed at stabilizing programs who participate in the subsidy system and maximizing family choice by providing predictable, advanced payments to providers who serve families on subsidy. Allowing states to pay providers based on attendance rather than enrollment and to pay retroactively risks destabilizing program budgets and disincentivizing participation in the subsidy system, limiting options for families relying on subsidy, especially as programs struggle to afford rising operational costs.  

Placing additional barriers for children in foster care, infants, and those experiencing housing instability–and the programs that serve them

Enrollment-based payments offer flexibility for programs to serve all children equitably, even when they have more frequent absences based on their individual and family circumstances. For children navigating the foster care system, for example, court appearances, mandated therapy, and changes in placement may require them to be absent from school twice the number of days as their peers. Housing instability can similarly have a negative impact on children’s ability to engage consistently in educational settings. And pediatric experts recommend infants visit their doctor a minimum of seven times in their first year of life to monitor their development and administer immunizations. If states decide to exercise their new flexibility and withhold payments to providers for days in which children are absent, providers may be less able to serve these and other children with diverse needs, limiting consistent access to quality care for some of the children who most benefit from it.    

States Make Headway on Implementing 2024 Rule Changes

The required policies adopted in the 2024 CCDF Final Rule to lower child care costs for families and improve provider payment practices were shaped directly by input from families, providers, and state leaders across the early childhood field. Recognizing the importance and effectiveness of these policies in helping stabilize child care programs, expand family access, and support parents in choosing care options that best meet their needs, many states have already made meaningful progress toward implementing these changes, as indicated in their submission of their 2025-2027 CCDF Plans in fall 2024. In fact, every single state is implementing at least one of the policies required in the 2024 CCDF Final Rule. Some states had already implemented these policies before the 2024 CCDF Final Rule was even released.   

According to a recent analysis, there were just 10 states who had not yet capped their copayments at 7 percent as of 2025—Alaska, Colorado, Hawaii, Maine, Minnesota, North Carolina, Ohio, Pennsylvania, Vermont and Wisconsin— with monthly copayments ranging from 7.8 percent of income in Wisconsin to as high as 27 percent of income in Ohio. Since then, Alaska, Maine, and Minnesota (beginning in October 2028) have enacted legislation to limit parent copayments to 7 percent going forward, meaning nearly all states have taken tremendous steps to bring copayments costs for families down to 7 percent or below. Colorado’s legislature passed a bill in 2026 that extends the implementation date for capping family copayments at 7 percent from August 2026 to August 2028.  

Payments based on enrollment were commonly implemented during the pandemic with federal relief funding, and many states continued this policy after this funding expired. Upon submission of the 2025-2027 CCDF Plans in fall 2024, 22 states and Washington, D.C., had moved to paying providers based on enrollment. Since then, Maine, Michigan and South Carolina have implemented payments based on enrollments, bringing implementation to cover half the nation. In 2025, Washington appropriated new funding in its enacted budget to support enrollment-based pay and Ohio passed legislation that required payments to providers to be based on enrollment no later than July 1, 2026. In 2026, both Maine and West Virginia codified this policy into statute.  

Several states have also made progress toward implementing prospective payments. As of fall 2024, Hawaii, Kansas, Maryland, North Dakota, Utah and Wisconsin had implemented this policy, and since then, so have Maine, New Hampshire, South Carolina, and Texas. In 2025, Ohio passed legislation that would require prospective payments to providers. Colorado’s legislature passed a bill in 2026 that extends the implementation date for both payment practices from August 2026 to August 2028.  

There are 10 states who have implemented grants and contracts for direct services as of fall 2024. Maine enacted legislation in 2025 that requires the state’s Lead Agency to directly contract with child care providers to build the supply of care for infants and toddlers, children with disabilities and children in underserved geographic regions. Colorado’s legislature passed a bill in 2026 that extends the implementation date for implementing grants and contracts from August 2026 to August 2028.  

While significant opportunities for expanded implementation remain, NAEYC’s ECE workforce survey found that 73 percent of child care directors and administrators would be more likely to accept families using subsidies if they could receive grants and contracts, indicating strong provider interest in and potential uptake of this policy if implemented.  

Budget Pressures May Lead to Some States Scaling Back

In some states, implementation of certain CCDF policies required under the 2024 CCDF Final Rule has paused due to growing budget pressures and competing fiscal priorities. Following several years of strong revenue growth, states are now facing tighter budget conditions driven by slowing revenues, the expiration of pandemic relief funding, rising costs, and recent federal policy changes expected to increase state administrative and program expenses. As states respond by reducing spending in some areas, this may put early childhood programs at risk for funding cuts and rolling back some previously implemented policies because they are no longer required under the 2026 CCDF Final Rule.  

Some states have responded particularly by scaling back on the progress they have made in the last few years to implement better payment practices. Ohio passed legislation in December 2025 to extend the deadline to implement payments based on enrollment from July 2026 to July 2028, and legislation has been introduced in 2026 to fully eliminate this change and instead require that subsidy reimbursement payments be made based on attendance. Missouri was anticipating launching prospective payments based on enrollment in January 2026, but in December 2025, the Lead Agency announced it was pausing implementation until further notice. In 2025, California's final budget appropriated new funding to support prospective payments for providers, though the state has not yet implemented this policy. While Washington had allocated funding in last year’s budget for these policies, the FY 2027 budget eliminated funding for rolling out prospective and enrollment-based pay that were scheduled to begin August 2026.   

Policy and Funding Considerations

States have made significant headway in implementing the policies required under the 2024 CCDF Final Rule. Movements to reversing course now could undermine investments and further destabilize child care systems, especially as states are demonstrating that these policies can strengthen both family access and provider stability. More timely, reliable payments help providers cover rising costs, retain educators, and keep child care slots available, while lower family copayments support stable employment, improve family well-being, and expand access to care.  

Although states are facing real fiscal pressures, scaling back these improvements would shift costs and instability onto families and providers who are already navigating significant economic strain. States should continue advancing these reforms to preserve recent gains and ensure families can access affordable, reliable child care in the settings that work best for them. Continued investment at both the state and federal levels is critical to maintaining the progress states have made toward a more stable and accessible child care system.