Last updated: April 30, 2026

How to Start a Daycare in Texas (2026)

Texas’s daycare market is structurally different from most states because Texas regulates child care through five distinct operation types – from a Listed Family Home (1-3 children, minimal regulation) up to a Licensed Child-Care Center (13+ children, full commercial facility) – and lets you choose which tier matches the scale you actually want to operate. The smallest tier requires almost nothing beyond reporting your activity to the state. The largest tier requires a separate licensed facility, full background-checked staff, and ongoing inspections. Most other states collapse the home-based options into one or two tiers. Texas’s tiered model gives a first-time operator real flexibility on starting scale.

The other thing Texas does differently is not cap maximum group sizes in licensed centers. Texas regulates child care through staff-to-child ratios alone – if you have enough qualified staff in the room, the room is compliant under 26 TAC Chapter 746. States like Massachusetts cap toddler classrooms at 9 and preschool at 20-24. Texas would let a preschool classroom run as large as you can staff it. That’s a meaningful operating economics difference for any operator scaling beyond 50 children. This guide compiles the specific Texas Health and Human Services Commission (HHSC), Texas Workforce Commission (TWC), and Department of Public Safety requirements that apply to starting a daycare in Texas in 2026 – the agencies, fees, ratios, licensing chapters, background-check rules, and Texas Rising Star quality-rating mechanics that decide whether your operation is profitable, compliant, and reimbursable for subsidy children.

Texas Daycare Requirements at a Glance

Requirement	Agency	Cost	Timeline
HHSC Operation Application (Listed/Registered/Licensed Home or Center)	Texas HHSC Child Care Regulation	$20-$85 family home application; $35 + $1/capacity center	3-9 months for licensed operations; faster for Listed Family Home
Annual License Fee	Texas HHSC	Varies by capacity (typically $50-$300+/year for centers)	Annual renewal
Background Checks (FBI fingerprint + DPS + Central Registry)	HHSC + Texas DPS + IDEMIA fingerprint vendor	~$35-$50 per person all-in; required for everyone 14+ on premises	Before opening; renewed periodically
Texas LLC Certificate of Formation	Texas Secretary of State	$300 (Form 205)	2-3 business days online
Sales and Use Tax Permit	Texas Comptroller	Free	2-3 weeks
Local zoning / use permit (Center)	City planning department	$200-$2,000 typical	4-12 weeks
Texas Rising Star Certification (optional but required for CCS subsidy)	Texas Workforce Commission via Local Workforce Development Boards	Free; assessor-led	24 months max from CCS enrollment to attain star certification
Workers’ Compensation (optional in TX)	Texas Mutual or private carrier	Varies; non-subscribers $0 but lose tort defenses	Optional – file DWC-005 if non-subscriber
General Liability + Sexual Abuse and Molestation	Commercial insurer	$1,500-$5,000/year (centers); $500-$1,500 (homes)	Required by most banks, leases, and CCS contracts
Food Service registration (if serving meals)	Local health department or DSHS	Varies by city	Before serving meals

How to Start a Daycare in Texas (Step by Step)

Step 1: Choose Your HHSC Operation Type

Texas HHSC’s Child Care Regulation division administers five operation types. Authority moved from DFPS to HHSC in 2018 when House Bill 5 of the 85th Legislature reorganized the Texas Health and Human Services system – older online sources still reference DFPS, but child care licensing is HHSC.

Operation Type	Capacity	Where	Regulation Level	TAC Chapter
Listed Family Home	1-3 unrelated children (plus your own)	Operator’s residence	Minimal – reportable only; no minimum standards beyond background checks	26 TAC Chapter 743
Registered Child-Care Home	Up to 6 unrelated children + 6 additional school-age (no more than 12 total including operator’s children)	Operator’s residence	Self-monitored; HHSC inspections, lighter standards than licensed	26 TAC Chapter 747
Licensed Child-Care Home	7-12 children with paid help	Operator’s residence	Full minimum standards; routine HHSC inspections	26 TAC Chapter 747
Licensed Child-Care Center	13+ children	Separate non-residential facility	Full minimum standards; routine HHSC inspections	26 TAC Chapter 746
Before/After-School and School-Age Program	Varies	School site or community facility	Specialized standards under Chapter 744	26 TAC Chapter 744

About the common search question "does an in-home daycare in Texas have to be attached to the house?" A Registered or Licensed Child-Care Home is, by definition, care provided in the operator’s primary residence – so the daycare IS the operator’s home. Operating from a separate detached structure (a guest house, a workshop, a converted garage that you do not actually live in) generally does not qualify as a "child-care home" under 26 TAC Chapter 747 – you’d need to license that separate structure as a Licensed Child-Care Center under Chapter 746 instead, which carries different square-footage, exit, and fire-code requirements. If you live in your principal residence and the children are in care inside that residence (or in attached spaces and the fenced yard), you’re operating a child-care home. If they’re in a structurally separate building you don’t live in, you’re operating a child-care center even if it’s on the same lot.

Step 2: Complete HHSC Pre-Application Orientation

HHSC requires a free pre-application orientation before you can submit your application. This is held by your Local CCR office (regional – Houston, Dallas, Austin, San Antonio, El Paso, and others). The session covers the minimum standards in your applicable TAC chapter, background-check process, application paperwork, and what to expect during the pre-opening inspection. Schedule through the HHSC Child Care Regulation website. Plan one full business day.

Step 3: Form Your Texas LLC and Get Your EIN

File Certificate of Formation Form 205 with the Texas Secretary of State for $300 (the highest standard LLC fee in the country). Online filings through SOSDirect process in 2-3 business days. Most daycare operators choose LLC over sole proprietorship because the personal liability separation matters when caring for other people’s children – even if you never have an incident, the lease, insurance, and financing logistics are simpler with a separate entity.

Get your free federal EIN at IRS.gov. Then register with the Texas Comptroller for any sales tax permit (free) you may need (most daycare-only operations have no taxable sales). Most small daycares fall below the franchise tax no-tax-due threshold of $2,650,000 and owe $0 – but every Texas LLC must file the Public Information Report by May 15 annually. Failure to file the PIR is one of the more common reasons operators end up with a forfeited LLC and have to pay reinstatement fees.

Step 4: Pass Background Checks for Everyone 14 and Older on Premises

Texas requires three independent background checks for every caregiver, household member 14+, and any adult regularly present at the operation:

• FBI fingerprint check through IDEMIA Live Scan (the state’s fingerprint vendor): ~$25 per person
• Texas DPS criminal history: included with fingerprint scan
• Central Registry check (DFPS) for any prior child abuse/neglect findings: $5-$10 per person
• Sex offender registry check: free, but mandatory verification

Total cost is typically $35-$50 per person all-in. Background checks must be completed and on file before you submit your application – HHSC won’t accept the application without confirmation. They are renewed periodically for ongoing operations. One disqualifying conviction is grounds to deny the operation – HHSC publishes a list of convictions that bar licensure (most violent felonies, sexual offenses, child abuse, drug trafficking).

Step 5: Meet 26 TAC Chapter 746 or 747 Minimum Standards

Centers operate under 26 TAC Chapter 746; homes under Chapter 747; before/after-school programs under Chapter 744. The standards govern building, equipment, supervision, training, nutrition, health, and emergency preparedness. Two Texas-specific points worth flagging:

Staff-to-child ratios (26 TAC § 746.1601 for centers; § 747.1607 for homes)

Age	Ratio (caregiver:children)
Birth-11 months (infants)	1:4
12-17 months (young toddlers)	1:5
18-23 months (older toddlers)	1:9
2 years	1:11
3 years	1:15
4 years	1:18
5 years	1:22
School age (6+)	1:26

Texas does not specify maximum group sizes in licensed centers – staff-to-child ratios alone govern classroom size, which is unusual nationally. Massachusetts caps preschool at 20 (full-day); North Carolina caps school-age at 25; Pennsylvania caps preschool at 20. Texas would let you run a single 4-year-old classroom of 36 children if you have two caregivers. That’s a real economics difference at scale – cost per child drops faster as the room scales up. Mixed-age groups apply the youngest-child ratio to the entire group.

Square footage

Centers must provide a minimum of 30 square feet of usable indoor activity space per child (excluding hallways, restrooms, kitchens, and storage), and 80 square feet of outdoor activity space per child for the maximum number expected outside at one time. Homes have lower thresholds because they share residential space.

Step 6: Pass HHSC Inspection and Obtain Your Initial License

HHSC conducts a pre-opening inspection covering all minimum standards plus background-check verification, staff training documentation, ratio plans, emergency preparedness, food service compliance, and outdoor playground safety. Initial licenses are issued for one year; thereafter HHSC inspects annually unannounced plus on-demand following any complaint. Inspection reports are public on the DFPS Child Care Search portal – parents check this before enrolling, so deficiencies have direct enrollment consequences.

Step 7: Apply for Texas Rising Star Certification (Required for CCS Subsidy)

Texas Rising Star (TRS) is the state’s quality rating and improvement system, administered by the Texas Workforce Commission through 28 Local Workforce Development Boards. Three star levels: Two-Star, Three-Star, and Four-Star (Texas operates a 4-star scale, not the 5-star scales used in some other states). All programs serving children in TWC’s Child Care Services (CCS) scholarship program must participate in TRS at least at Entry Level since October 2, 2022, and have up to 24 months to attain Two-Star or higher certification.

The reimbursement bonus structure is meaningful for any operator who plans to accept subsidy children:

• Two-Star: at least 5% above non-certified base rate
• Three-Star: at least 7% above non-certified base rate
• Four-Star: at least 9% above non-certified base rate

Plus enhanced pay scales for staff with credentials, mentor visits, and access to TRS-only grant funds. Most centers in lower-income markets use CCS subsidy as 30-60% of their revenue mix – TRS certification is effectively a baseline requirement to compete for those families.

Step 8: Texas Pre-K, CCS Subsidy, and Texas Workforce Commission Coordination

Three TWC-coordinated funding streams shape Texas daycare economics:

• Child Care Services (CCS) subsidy: Income-based subsidy administered by TWC through 28 Local Workforce Development Boards. Eligibility tied to family income (typically below 85% of state median) and parent work/school requirements. Required TRS participation.
• Texas Pre-Kindergarten under TEC Chapter 29: Full-day or half-day pre-K for eligible 4-year-olds through Independent School Districts (ISDs) – HB 3 of 2019 made full-day pre-K mandatory for eligible children. Most ISDs deliver pre-K through district-operated classrooms; some contract with private centers.
• Child and Adult Care Food Program (CACFP): Federal USDA-funded reimbursement for meals/snacks served in eligible centers and homes. Administered through Texas Department of Agriculture’s Food and Nutrition division.

Texas Daycare Labor Rules: Texas-Specific Differences

Workers’ compensation is optional in Texas. A small daycare can operate as a non-subscriber and pay $0 in WC premium – but the loss of common-law tort defenses (contributory negligence, assumption of risk, fellow servant) creates real exposure when an injured employee or a parent of an injured child sues. For NCCI class code 9059 (child day care) the premium isn’t astronomical, and most operators subscribe through Texas Mutual or a private carrier rather than absorb the litigation risk. Non-subscribers must file Form DWC-005 with the Division of Workers’ Compensation reporting their status.

No state-mandated paid sick leave applies. HB 2127 of 2023 (the Texas Regulatory Consistency Act) preempted Austin, Dallas, and San Antonio’s local paid sick leave ordinances effective September 1, 2023. Plan PTO policy at the state minimum level – your local city cannot mandate higher than federal/state floors.

Texas state minimum wage is $7.25/hour. Texas has not raised its rate since 2009, and Section 62.0515 of the Labor Code preempts cities from setting higher rates. Daycare wages typically run above minimum due to TRS staff-credential requirements (Child Development Associate, associate degrees in early childhood) – but the floor is genuinely $7.25.

New hire reporting: Report every new employee within 20 days to the Texas Attorney General Child Support Division. $25 per missed report.

Workers’ comp class code 9059 covers employees of a child day care center. Premium typically runs 1-3% of payroll for low-claim operations – much lower than NCCI 5537 HVAC or 0042 landscaping. Subscribers pay; non-subscribers file DWC-005 and accept tort exposure.

Texas Daycare Market: Where the Demand Is

Major metros driving demand:

• Houston metro (Harris, Fort Bend, Brazoria, Montgomery): 7.5M people. Strong infant and toddler demand from energy-sector and Texas Medical Center workers; Spring-Klein, The Woodlands, and Sugar Land suburbs run waiting lists at quality centers.
• Dallas-Fort Worth (Dallas, Tarrant, Collin, Denton): 8M people. Plano-Frisco-McKinney corporate-relocation corridor (Toyota, JPMorgan, Liberty Mutual) creates persistent daycare shortage; Frisco operates one of the highest median household incomes in the country.
• Austin metro (Travis, Williamson, Hays): 2.5M people and the fastest-growing metro in the US. Tech-worker demographics push demand for high-quality (Three-Star and Four-Star TRS) centers; significant private-pay tier above CCS subsidy rates.
• San Antonio (Bexar, Comal, Guadalupe): 2.7M people. Joint Base San Antonio (Lackland, Randolph, Fort Sam Houston) drives military-family demand with subsidized child care fee structures.
• El Paso, Lubbock, Amarillo, McAllen, Corpus Christi: Mid-size metros where CCS subsidy mix typically dominates the revenue model.

Suburban tech corridors (Plano, Frisco, McKinney, Round Rock, Cedar Park) are the highest-revenue private-pay markets – parents in these zip codes routinely pay $1,800-$2,500/month for infant care. Energy-sector boom-bust in the Permian Basin creates volatile demand patterns – daycare openings track rig counts more than national averages would suggest.

Cost to Start a Daycare in Texas

Home-Based (Registered or Licensed Child-Care Home)

Item	Cost	Notes
HHSC application + license fees	$50-$200	Listed/Registered cheaper; Licensed Home higher
Background checks (3-5 people typical)	$150-$300	Includes operator, spouse, household 14+, regular adult helpers
LLC formation	$300	Form 205 one-time
Initial supplies, equipment, fenced outdoor play area	$2,000-$8,000	Cribs, gates, age-appropriate toys, outdoor surfacing, security
Pre-application orientation + training	Free	Time-cost only
General liability + sexual abuse and molestation insurance	$500-$1,500/year	Required by most lenders, leases, and CCS contracts
Workers’ comp (if hiring help)	Optional in TX; varies	NCCI 9059 class code; non-subscribers $0 with tort exposure
Estimated total: $3,000-$10,000 to launch a registered home

Licensed Child-Care Center (13+ children)

Item	Cost	Notes
HHSC application + license fees	$200-$600	Scales with capacity ($1/capacity for centers)
Lease deposit + first 3 months rent	$15,000-$60,000	Daycare-suitable space at $12-$28/sqft Houston/DFW; higher in Austin
Tenant improvements (sinks, partitions, kitchen, fenced playground)	$50,000-$200,000	Daycare buildouts are heavily regulated – expect 30 sqft/child indoor + 80 sqft/child outdoor
Equipment, furniture, supplies	$25,000-$80,000	Cribs, cots, age-appropriate furniture, toys, curriculum materials
Background checks (10-25 staff typical)	$500-$1,500	$35-$50 per person all-in
LLC, insurance, accounting setup	$2,500-$5,000	Includes commercial liability + sexual abuse and molestation
3 months operating reserve before break-even enrollment	$60,000-$150,000	Centers typically take 6-9 months to reach break-even occupancy
Estimated total: $150,000-$500,000+ for a Licensed Child-Care Center

Key Texas Daycare Resources

Agency / Resource	What It Covers
Texas HHSC Child Care Regulation	Operation licensing, minimum standards, inspections, complaint investigations
DFPS Texas Child Care Search	Public-facing inspection reports and operation lookup
TWC Child Care Services (CCS)	Subsidy program, parent eligibility, provider contracting
Texas Rising Star	Quality rating system (Two/Three/Four-Star), provider certification, mentoring
Texas Child Care Connection	Parent-facing resource portal; provider eligibility tools
Texas Department of Agriculture Food and Nutrition	Child and Adult Care Food Program (CACFP) – federal meal reimbursement
DFPS Background Check Services	Central Registry checks, FBI fingerprint coordination

Related Texas Business Guides

• Starting a Business in Texas: Complete Guide

← Back to all Texas business guides

Frequently Asked Questions

Does an in-home daycare in Texas have to be attached to the operator’s house?

A Registered or Licensed Child-Care Home in Texas is, by definition, care provided in the operator’s primary residence – the daycare IS the home. You can use attached spaces and the fenced yard. Operating from a separate, structurally detached building you do not actually live in (a guest house, a workshop, a converted garage that you don’t reside in) generally does not qualify as a "child-care home" under 26 TAC Chapter 747 – you would need to license that separate structure as a Licensed Child-Care Center under Chapter 746 instead, with center-level square footage, fire-code, and exit requirements.

Which Texas daycare operation type should I start with?

Most first-time operators choose Registered Child-Care Home (up to 6 unrelated children + up to 6 additional school-age in after-school hours) under 26 TAC Chapter 747. It allows meaningful capacity, the regulation level is reasonable for a single operator, and it’s run from your residence. Listed Family Home (1-3 unrelated children) is for very small operations or a relative providing care. Licensed Child-Care Home (7-12 with paid help) and Licensed Child-Care Center (13+ in a separate facility) require more capital and overhead but unlock higher revenue ceilings.

What are the staff-to-child ratios for licensed child care centers in Texas?

Per 26 TAC § 746.1601: 1:4 for infants (birth-11 months), 1:5 for young toddlers (12-17 months), 1:9 for older toddlers (18-23 months), 1:11 for 2-year-olds, 1:15 for 3-year-olds, 1:18 for 4-year-olds, 1:22 for 5-year-olds, and 1:26 for school-age (6+). Texas does not specify maximum group sizes in licensed centers – staff-to-child ratios alone govern classroom size. Mixed-age groups apply the youngest-child ratio to the entire group.

What is Texas Rising Star and do I need it?

Texas Rising Star (TRS) is the state’s quality rating and improvement system, administered by TWC through 28 Local Workforce Development Boards. Star levels: Two-Star, Three-Star, and Four-Star. Higher star ratings receive 5%, 7%, and 9% reimbursement rate bonuses respectively over non-certified base rates for CCS subsidy children. Since October 2, 2022, every program accepting CCS-subsidy children must participate in TRS at least at Entry Level and has up to 24 months to attain Two-Star or higher. If you plan to serve subsidy families, TRS certification is effectively a baseline requirement.

How much does it cost to start a daycare in Texas?

Home-based options (Registered or Licensed Child-Care Home) typically launch for $3,000-$10,000 total – HHSC fees, background checks, supplies, fenced outdoor area, and basic insurance. Licensed Child-Care Centers (13+ children, separate facility) typically run $150,000-$500,000+ including lease deposit, tenant improvements (30 sqft indoor + 80 sqft outdoor per child), equipment, staff hiring, background checks, insurance, and 6-9 months of operating reserve before break-even occupancy.

Is workers’ compensation required for a daycare in Texas?

No – Texas is the only state where workers’ comp is optional for private employers. Daycare class code is NCCI 9059 (typically 1-3% of payroll – lower than HVAC’s 5537 or landscaping’s 0042). Most daycare operators subscribe rather than risk tort exposure. Non-subscribers must file Form DWC-005 with the Division of Workers’ Compensation reporting their status and lose common-law defenses (contributory negligence, assumption of risk, fellow servant rule) if a parent or employee sues over an injury.

Does Texas require background checks for daycare staff?

Yes – and the requirement extends beyond staff. Texas HHSC requires FBI fingerprint, Texas DPS criminal history, DFPS Central Registry, and sex offender registry checks for every caregiver, household member 14 years and older, and any adult regularly present at the operation. Total cost: roughly $35-$50 per person all-in through IDEMIA. Background checks must be on file before HHSC accepts your application. Disqualifying convictions (most violent felonies, sexual offenses, child abuse, drug trafficking) bar licensure.