FAQs for service providers - Increases to the DCJ care allowance
Yes. The 2025-26 NSW Budget includes the first increase to the care allowance in 20 years, with $143.9 million budgeted to recognise the critical role of foster carers to keep NSW children safe.
The new DCJ care allowance rates will come into effect from 1 January 2026.
The new increased DCJ rates will apply to statutory and supported out-of-home care allowances, as well as guardianship and adoption allowances.
The Independent Living Allowance, Aftercare Allowance, Staying On Allowance and Post Care Education Financial Support payments, will increase in line with the Consumer Price Index (CPI).
The DCJ standard care allowance rates are increasing by 20 per cent.
The CPI increase for the 2025-26 financial year has been rolled up in the new rates.
Based on DCJ standard rates, the tax-free allowance will be:
Age | Current rate | New rate from 1 January 2026 |
|---|---|---|
0 to 4 years | $581 | $697.20 |
5 to 13 years | $656 | $787.20 |
14 to 15 years | $880 | $1,056 |
16 to 17 years | $586 | $703.20 |
The DCJ rates for Care +1 and +2 will increase by $160 per fortnight from 1 January 2026.
Age | Current rate per fortnight Care + 1 | New rate per fortnight Care + 1 | Current rate per fortnight Care + 2 | New rate per fortnight Care + 2 |
|---|---|---|---|---|
0 to 4 years | $873 | $1,033 | $1,153 | $1,313 |
5 to 13 years | $983 | $1,143 | $1,294 | $1,454 |
14 to 15 years | $1,317 | $1,477 | $1,736 | $1,896 |
16 to 17 years | $1,023 | $1,183 | $1,447 | $1,607 |
Yes. The care allowance will continue to increase each year in line with the Consumer Price Index (CPI) escalation rate, subject to NSW Treasury approval.
The increases announced apply to DCJ standard care allowance rates.
While non-government providers are required to pay a minimum of the DCJ standard rate, there is no universal rate of allowances across the sector. As such, the way this increase is applied to individual cases may vary from provider to provider.
The NSW Government is closely considering recommendations of the Independent Pricing and Regulatory Tribunal’s Review of OOHC Costs and Pricing to standardise care allowances across government and non-government providers.
This should be considered when implementing the care allowance uplift within organisational policies.
No. The increases announced apply to DCJ standard care allowance rates only.
Permanency Support Program (PSP) Therapeutic Home-Based Care allowance rates will continue to increase in line with CPI.
Carers who receive higher allowances as part of bespoke programs delivered by non-government providers, will not be subject to the same increase. These bespoke programs have individual unit costs and tailored allowances based on children and young people’s more intensive level of need. Where bespoke programs contracts are subject to annual escalation, allowances will continue to increase in line with CPI.
Yes. The NSW Government will fund the care allowance uplift in two stages.
Firstly, the 2025-26 rate of indexation for human services contracts is 3.5 per cent. DCJ recently indexed the PSP baseline package by 3.5 per cent from 1 July 2025 which includes funding for care allowances.
Non-government providers will be required to utilise indexation tied to care allowance outlays from 1 July 2025 to support the uplift in care allowances from 1 January 2026.
Secondly, the care allowance component of the PSP baseline package will be further increased from 1 January 2026 to meet the remaining cost of the care allowance uplift.
These two increases ensure that non-government providers are fully funded to pass on the NSW Government’s care allowance uplift.
The new rate of the PSP Foster Care and Aboriginal Foster Care baseline package per child from 1 January 2026 will be:
PSP Baseline Package | 1 July 2025 day rate | 1 July 2025 annual rate | 1 Jan 2026 day rate | 1 Jan 2026 annual rate |
|---|---|---|---|---|
Foster Care | $140.43 | $51,256.95 | $149.03 | $54,395.95 |
Aboriginal Foster Care | $145.53 | $53,118.45 | $154.13 | $56,257.45 |
Increases to the care allowance component of the package have been calculated based on a weighted average taking into account the average ages and levels of need of children in non-government care. The weighted average has been informed by care allowance data recently provided by non-government providers, and assumes a proportion of children on standard care, care +1 and care +2 (or equivalent).
Yes. The Teenage Education Payment (TEP) will continue to be available for carers supporting young people aged 16 to 17 who are still engaged in ongoing education in line with eligibility requirements. This will continue to be available up to $6,000 per year.
Sometimes, the child or young person in care may need support that costs more than what the care allowance covers. In these cases, carers may be able to access contingency payments for additional financial help such as for tutoring, dental or optical services, professional therapy, or travel.
Establishment payments may also be available and help cover the cost of buying essential items for a child or young person when they first come to live with a carer, such as school uniforms, bedroom furniture, bedlinen, baby capsules, car booster seats, clothing and footwear, nappies and formula and personal items.
Carers should always speak to their caseworker before spending money they want to be reimbursed for.
Existing care allowance rates have been increased annually in line with CPI. This is the first formal review of the DCJ standard care allowance rates in nearly two decades. The new rates reflect updated cost of living data and the real expenses faced by carers.