Dependent Care FSA Limits Increase 50% in 2026: What you need to know

One Big Beautiful Bill Act (OBBBA) has delivered welcome news for working parents and caregivers: dependent care FSA limits are increasing by 50% starting January 1, 2026. After remaining unchanged since 1986, these long-overdue increases will provide significant tax savings opportunities for employees managing childcare and eldercare expenses.

DC-FSA Limit Changes: 2026 vs 2025 Comparison

The new dependent care flexible spending account limits represent the first meaningful increase in nearly four decades:
2026 New Limits (Effective January 1, 2026)

• Single individuals and married filing jointly: $7,500 (up from $5,000)
• Married filing separately: $3,750 (up from $2,500)

Current 2025 Limits

• Single individuals and married filing jointly: $5,000
• Married filing separately: $2,500

What Is a Dependent Care FSA (DC-FSA)?

A Dependent Care Flexible Spending Account is a pre-tax employee benefit that allows workers to set aside money from their paycheck to pay for qualifying dependent care expenses. Unlike Health Savings Accounts (HSAs), DC- FSAs are employer-sponsored benefits that don’t require health insurance enrollment.
Key DCFSA Benefits:

• Immediate tax savings: Reduce taxable income dollar-for-dollar
• Payroll deduction convenience: Automatic contributions from each paycheck

Qualifying Dependent Care Expenses for Your FSA

Your DC-FSA funds can be used for a wide range of care services while you’re working or looking for work:
Care Services

• Day care, preschool, and nursery school
• Summer day camps
• Some approved nanny services
• Before- and after-school care

DC-FSA expenses must be eligible for reimbursement

• Expenses allow you or your spouse to work or look for work.
• Expenses are used to help care for a qualifying person.

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