Higher Tax Exclusion for Dependent Care Flexible Spending Accounts (DCFSA).
This bill increases the maximum amount families can exclude from their taxable income for dependent care expenses through Flexible Spending Accounts (DCFSA). The limit rises from $5,000 to $7,500 annually, providing greater tax relief for working parents and caregivers. These changes will apply starting with the 2025 tax year.
Key points
The maximum tax-free contribution limit for Dependent Care FSAs increases from $5,000 to $7,500.
This change allows families to save more money tax-free to cover costs like childcare or care for dependents.
For married individuals filing separately, the limit increases from $2,500 to $3,750.
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