Child Expenses List: What Kids Really Cost a High-Income Family in California or Washington

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

A complete child expenses list has nine lines: childcare, school and education, housing, food, activities and camps, health care, travel and transportation, clothing and gear, and savings for the child’s future (529s and insurance). The federal benchmark says a higher-income married couple spends about $19,380 to $23,380 a year per child, or $372,210 from birth to 17, in 2015 dollars and before college (USDA, Expenditures on Children by Families, 2015). For a $750,000 to $3 million household in California or Washington, that number is far too low. In the worked example below, spending per child runs about five to six times the USDA figure, mainly because of childcare and school.

Why the USDA average misleads a $900,000 household

The USDA estimate is the most cited figure on what kids cost, and it is useful as a list of categories. It is not useful as a budget for this reader, for three reasons.

• “Higher income” means something else. The USDA’s top group is any married couple earning more than $107,400, and the average income in that group was $185,400 (2015 dollars). A dual-physician or biotech household earning $900,000 sits far above that average.
• Childcare is the line that scales. The USDA top group spent $5,170 a year on child care and education for a child aged 0 to 2. In the worked example below, a full-time nanny costs about 15 times that.
• College is excluded. The report covers birth through age 17 only. Saving for college is a separate line you have to add yourself.

The report is also based on 2011 to 2015 spending data and has not been updated since, so treat its dollar figures as a category guide rather than a current price.

The federal benchmark, line by line

Here is the USDA breakdown for the higher-income group (younger child in a two-child, married-couple family, 2015 dollars). It shows where the money goes, not how much a high-earning family in a coastal city spends.

Two more findings from the same report matter for planning. A family with one child spends about 27% more on that child than on each child in a two-child family, and a family with three or more children spends about 24% less per child, because rooms, clothes and toys get shared.

Worked example: two kids under 7 in San Mateo County

Assumptions (illustrative, not market data): married couple, both W-2 (a physician and a biotech director), $900,000 combined wages, children aged 2 and 6. Each parent defers $24,500 to a 401(k), the 2026 limit (IRS Notice 2025-67). Every dollar amount below is the family’s own estimate, not an average.

That is about $116,500 per child per year, roughly six times the USDA figure for a child under 3 in its top income group ($19,770 in 2015 dollars). It is also about 26% of gross pay. If the family chose public school, the total drops by $38,000, which is why the school decision is the single largest variable on this list.

A few notes on the lines that carry tax rules:

• The nanny makes you an employer. Paying a household employee generally means withholding and paying Social Security and Medicare (6.2% plus 1.45% from each side, for 2026, per IRS Publication 15) and filing Schedule H with your return (IRS Publication 926). Federal unemployment tax (also covered in Publication 926) and state payroll registration and unemployment insurance in California or Washington are not shown above.
• The 529 line fits inside the gift tax annual exclusion. For 2026 each parent can give $19,000 per child without using lifetime exemption (Rev. Proc. 2025-32). California gives no state deduction for 529 contributions, but growth is free of state tax when used for qualified college costs.
• The child tax credit is zero here. The 2026 credit is $2,200 per child, but it phases out by $50 for each $1,000 (or part of $1,000) of modified adjusted gross income over $400,000 for joint filers. A couple with two children reaches zero at $488,000 (IRS). Do not budget for it.

What a dollar of childcare really costs in California versus Washington

Kids are paid for with after-tax money, so the real question is how much gross pay each dollar of spending takes. In this example the household is in the 37% federal bracket for 2026 (taxable income over $768,700 for joint filers) and pays 2.35% Medicare on wages above $250,000 (1.45% plus the 0.9% Additional Medicare Tax).

• California: add the 10.3% state bracket (2025 schedule, the latest published; joint taxable income of $742,958 to $891,542) and 1.3% SDI on all wages for 2026 (EDD). The marginal take is about 51%, so each $1 of nanny pay or tuition costs about $2.04 of gross salary.
• Washington: no wage income tax for 2026 (WA DOR), plus 0.58% WA Cares premium on wages. The marginal take is about 40%, so each $1 costs about $1.66. Washington has enacted a 9.9% tax on income above $1,000,000 starting in 2028, so a household near that line should not assume this gap lasts.

On the $232,967 budget, that is the difference between roughly $475,000 and $388,000 of gross pay at the margin. The number helps when you are weighing whether a second nanny, a later return to work or a move is worth it.

The three offsets worth setting up

1. Dependent care FSA. For 2026 the household limit rose to $7,500 (from $5,000) under the One Big Beautiful Bill Act, if your employer’s plan adopts it (P.L. 119-21, §70404). At a 37% federal rate, $7,500 of nanny or preschool cost run through the account saves about $2,775 in federal income tax, plus some Medicare tax. Only one household limit applies even if both parents’ employers offer the account.
2. 529 superfunding. If you have cash from an RSU vest or bonus, each parent can make five years of annual-exclusion gifts at once, up to $95,000 per child for 2026, by filing Form 709 (Form 709 instructions). That moves college savings off the monthly budget and gives the money more years to grow.
3. Health savings account. If you are on a high-deductible plan, the 2026 family limit is $8,750 (Rev. Proc. 2025-19), which can carry pediatric and orthodontic costs with money that is pre-tax for federal purposes. California does not conform to the federal HSA deduction, so contributions are still taxed by California (FTB, 2025 Schedule CA instructions).

The line most families leave off: if both parents die

A child expenses list usually stops at what you spend. For a family with $230,000 a year of child costs and no grandparent who could absorb them, the bigger gap is what happens if both incomes stop. Three items belong on the list even though they cost little each year: a will that names a guardian, a trust that holds money for the children rather than an outright gift at 18, and term life insurance sized to the remaining years of this budget. These are covered in our estate planning work.

Common mistakes when budgeting for kids at this income

• Using the national average. It was built around households earning a fraction of yours and leaves out college.
• Budgeting gross, spending net. In California, each dollar of private school takes about two dollars of salary at the margin.
• Paying the nanny off the books. It can lead to back taxes and penalties later, and leaves your nanny without Social Security credit.
• Forgetting that school costs rise when childcare falls. The nanny line shrinks at kindergarten, but tuition, after-school care and camps often replace it.
• Leaving the dependent care FSA at the old $5,000. Check your 2026 elections.

What to write down for your kids

Your children will see the outcomes of these choices (the school, the nanny, the house) long before they understand the trade-offs behind them. A one-page note each year on why you chose public or private school, how much you set aside for their education and what you gave up to do it is the kind of record a teenager can learn from. As Kevin Luu puts it: “Your kids will inherit your money. Will they inherit your judgment?” Our Age Five Wealth Education work and the FamilyKnowledge® Library are built around capturing that reasoning.

Frequently asked questions

What is the average annual cost of a child?

The latest USDA estimate puts it at $12,350 to $13,900 a year for a middle-income married couple and $19,380 to $23,380 for couples earning over $107,400, in 2015 dollars, excluding college. Those figures have not been updated since and understate costs for high-income families in expensive metros, where childcare and private school in our worked example come to about $122,000 a year.

How much does a baby cost per month?

For the USDA’s higher-income group, spending on a child aged 0 to 2 averaged $19,770 a year, about $1,650 a month, in 2015 dollars. A full-time nanny, as in the worked example, can cost several times that on its own, so build your own number from the list above rather than relying on the average.

Does the cost of raising a child include college?

No. The USDA estimate covers birth through age 17 and explicitly excludes college. Add it as its own line, usually through 529 contributions. Each parent can give $19,000 per child for 2026 within the annual gift exclusion, or front-load up to $95,000 per child with the five-year election.

Your next step

Build your own version of the worked example table with your real nanny, school and housing numbers, then mark which lines are choices and which are fixed. If you want a second set of eyes on how those costs interact with your RSUs, benefits and taxes, our tax management and employee benefits teams at Age Five Family Office™ start with a Tax & Wealth Assessment. This is general education, and the right move depends on your family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

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