Daycare is definitely expensive - and it sort of has to be, when you think about it; particularly at the infant age, you need one caretaker per 3 children, meaning you're paying at least 1/3 of a person's salary (plus employment taxes), plus the other costs of the daycare (administrative staff, building, consumables, furniture upkeep, etc.), plus some minimal profit (and it's minimal). $12k annually is cheap - I paid $475 a week for my first (almost $25k annually), in a major city in a daycare center.
Besides the good suggestions here - largely the FSA or childcare tax credit - you can't really reduce things on the tax side, but you can make some choices. I assume here that both parents want to continue working (whether because it makes financial sense or because they both wish to), and that there are no relatives in the area that can help take care of kids - grandma and grandpa are the cheapest daycare for many, after all.
Depending on your work flexibility, for example, it may be possible to find a cooperative arrangement with other parents in your area where one of you watches several children each day, rotating days.
You may be able to reduce the total days in daycare if you can rearrange your working days, also; this is probably more feasible than a cooperative unless you have a lot of friends in similar situations. You could switch working Thursdays with Saturdays, for example; then you only need four days coverage. And if your wife worked Sundays instead of Tuesdays, you need only three! (Of course, then you don't have any days to do other fun things together, but that's the choice you would have to make).
You also can often reduce the hours in daycare; for example, one of you works 7-4 one 9-6. Then you only need coverage 9-4. Maybe you can even adjust it further, like 7-4 and 11-8. Or perhaps one of you goes down to part time, and works 3 days a week, one not overlapping with the other parent, meaning you only have two days coverage needed.
All of these are still compatible with the tax credit and/or FSA, as both parents are working at least half time, though I wouldn't factor those trivial amounts into anything as they're not that large (maybe $1500 a year at most).
Beyond that, though, you're really just going to have to spend some of that money. You're probably going to have to save less, as unfortunate as that is; but children are very expensive. And don't imagine that it actually gets much cheaper once they hit five and go to kindergarten; there's still lots of stuff going on then that costs money, more expensive clothes, after school care, summer camps, soccer teams... it goes on and on. Kids are expensive, there's no getting around that.