For a family with children in care, the pay for an extra day is only the start of the answer. Several parts of the household budget move at once: tax goes up, the Child Care Subsidy (CCS) rate can go down, care may cost more, and Family Tax Benefit (FTB) can fall. One change can go the other way, too — the extra hours may unlock more subsidised care.
This guide walks through each part, in the order the money moves, so the answer from our Extra Day calculator is easy to follow.
1. The extra pay
The starting point is the gross pay for the extra day, across the weeks you work in the year. For a salaried role going from three days to four, that is about a third more than your current pay. For hourly work, it is the hourly rate times the hours in the day.
Employer super on the extra pay is paid on top of your wage, into your super account, so it is not part of the take-home figure.
2. Income tax and the Medicare levy
The extra pay is taxed at your marginal rate — the rate on your top dollar of income — not your average rate. If the extra day moves you into a higher tax bracket, only the part above the bracket line is taxed at the higher rate.
The Medicare levy of 2% applies on top.
3. A study loan repayment
If you have a Higher Education Loan Program (HELP) debt, the compulsory repayment is worked out from your income, not your balance. Repayments start once repayment income passes $69,528, and above that, part of each extra dollar goes to the loan. An extra day can also be the step that takes you over the starting line. Our guide on HELP repayments and an extra day covers the tiers.
4. The Medicare Levy Surcharge
Without private hospital cover, a higher income can bring in the Medicare Levy Surcharge (MLS). For families, it applies above $210,000, a threshold that rises for each dependent child after the first; for singles, above $105,000. The surcharge rate, from 1% up to 1.5%, applies to your whole income for the year, not only the amount above the line — so crossing it with an extra day costs more than the extra pay suggests. See the Medicare Levy Surcharge and an extra day.
5. Your Child Care Subsidy rate
CCS is income-tested on family adjusted taxable income (ATI) — both partners' ATI added together in a couple.
| Family ATI (2026-27) | Standard CCS rate |
|---|---|
| Up to $88,520 | 90% |
| Above $88,520 | Falls by one percentage point for every $5,000 |
| $538,520 and above | Zero |
If your family ATI is in the tapering range, the extra income lowers the subsidy rate on every hour of care you already use, for every child, for the whole year. This is easy to miss: the cost is not only on the new day. Younger siblings aged 5 or under can attract a higher rate with its own income bands — higher CCS for a second child covers those.
6. Subsidised hours: the change that can help
The activity test sets how many hours of care are subsidised for each child each fortnight:
- 72 hours under the 3 Day Guarantee, for every eligible family.
- 100 hours when each parent does more than 48 hours of recognised participation a fortnight. For a couple, both partners need to clear it (or have an exemption), so the lower-activity partner decides the family's hours.
For some parents, the extra workday is the step that takes their recognised participation above 48 hours a fortnight. Whether it does depends on the hours in your workday and any study, volunteering or other activity already counted. If your children are booked for more hours than you currently have subsidised, lifting the limit means those extra hours start attracting CCS — which can offset some or all of the rate change above. Our 3 Day Guarantee guide explains the two levels.
7. The hourly fee cap
CCS is paid on the lower of your centre's hourly fee and the hourly rate cap. For centre-based day care for a child below school age, the 2026-27 cap is $15.19 an hour. Any part of the fee above the cap is paid in full by the family, so if your centre charges above it, each extra care day carries that unsubsidised gap as well. The hourly cap guide explains how this works.
8. An extra day of care — or not
Working an extra day does not automatically mean an extra day of care. Some families already have care booked, some use a grandparent or partner, and some need to add a day. If care does increase, its cost is the daily fee less the subsidy, and the subsidy only applies to hours within your subsidised limit. Centrelink also holds back 5% of each subsidy payment until the year is balanced, so the gap fee you pay each fortnight is a little higher than the subsidy rate alone suggests.
The calculator asks about work and care separately for this reason.
9. Family Tax Benefit
Both parts of FTB are income-tested, so extra income can reduce them:
- FTB Part A is tested on family ATI. Above $69,131, it reduces by 20% of each extra dollar until it reaches the base rate, with a second test further up. The end-of-year supplement has its own family income limit. See FTB Part A explained.
- FTB Part B for a couple is tested mainly on the lower earner's income: above $7,154 a year, it reduces by 20% of each extra dollar. It stops altogether if the higher earner's ATI is above $124,327. See FTB Part B explained.
If the parent taking the extra day is the lower earner, the Part B taper can apply to their extra income, once it is above $7,154.
Putting it together
The household result of an extra day is:
extra pay − income tax and Medicare levy − any study loan repayment − any Medicare Levy Surcharge − any increase in childcare out-of-pocket + any change in Family Tax Benefit
The childcare line already includes the lower CCS rate, any newly subsidised hours, the hourly cap and any extra care day. Each line can be small or large depending on where your family income sits, which is why two families with the same pay rise can get very different answers.
Things outside that figure are still worth weighing: work costs such as travel, the employer super added to your balance, and what the extra day means for your career and time at home. Those are yours to judge.
What NestWise's calculator does
The Extra Day calculator runs your household twice — as it is now, and with one more workday — using the same rates and income tests as our CCS and FTB calculators. It shows the extra pay, tax (including any study loan repayment or surcharge), childcare out-of-pocket and Family Tax Benefit (FTB), says when your subsidised hours change, and gives the total a year and a week. It assumes a 7.6-hour day, 52 weeks, paid work as the only activity, and long day care for children under school age. It includes:
- income tax and the Medicare levy
- a study loan repayment, if you tick that you have one
- the Medicare Levy Surcharge, if you have no private hospital cover
- the change in CCS from the income test and the activity test, with the hourly cap
- an extra care day, if you choose to add one
- Family Tax Benefit Parts A and B
If the extra day changes your subsidised hours, the result says so.
Once you have decided, update your family income estimate so the subsidy paid during the year stays close to what reconciliation will find.
Sources: Services Australia — Child Care Subsidy, DSS Family Assistance Guide §3.5 — Child Care Subsidy, Australian Taxation Office — Individual income tax rates, Australian Taxation Office — Study and training loan repayment thresholds.