Estimate your dependent care FSA savings
The higher limit applies only if the plan adopted it.
If single, your own pay.
Building a family-friendly benefits package? Get a Prescience Diamond quote →
The limit you can use is the smallest of three numbers: the federal household limit, your employer's plan limit, and the earned income of the lower-earning spouse. If you're single, use your own pay. Savings include federal and state income tax and the 7.65% FICA tax that payroll contributions skip.
A dependent care FSA lets you pay for daycare, preschool, after-school programs and summer day camp with pre-tax pay. Starting in 2026, the federal limit rose from $5,000 to $7,500 per household, or $3,750 if you're married and file separately, the first increase since 1986. But your employer's plan has to adopt the higher limit, and many still cap at $5,000. Enter your election and plan limit to see what you'll save.
- 2026 limit, per household
- $7,500
- Married filing separately
- $3,750
- Limit before 2026
- $5,000
- Eligible dependents
- Children under 13, others who can't self-care
What changed for 2026
| 2025 and earlier | 2026 onward | |
|---|---|---|
| Household limit | $5,000 | $7,500 |
| Married filing separately | $2,500 | $3,750 |
| Indexed to inflation | No | No |
| Employer must adopt | n/a | Yes, by plan amendment |
The One Big Beautiful Bill Act raised the Section 129 limit starting with 2026. It isn't automatic: the plan sponsor has to amend the cafeteria plan to allow it. If your open enrollment materials still say $5,000, that's your limit for the year even though the law allows more.
The limit is per household, not per employee. If you and your spouse both have a dependent care FSA through work, your combined elections can't exceed $7,500. Amounts over the limit become taxable wages.
Worked examples
What a dependent care FSA covers
The care has to let you (and your spouse, if married) work or look for work. It must be for a qualifying person: your child under 13, or a spouse or dependent of any age who can't care for themselves and lives with you more than half the year.
- Covered: daycare centers, preschool, nannies and au pairs, before- and after-school care, and summer day camp.
- Not covered: overnight camp, kindergarten and school tuition, care while you're not working, and payments to your own child under 19 or to someone you claim as a dependent.
Unlike a health FSA, you can only be reimbursed for care that has already happened, up to what's in your account. There's no carryover; most plans allow a grace period of up to two and a half months. Our health FSA calculator covers the separate medical account.
How reimbursement works
A dependent care FSA works differently from a health FSA. You can only be reimbursed up to what you've contributed so far, and only for care that has already been provided. If you prepay a month of daycare on the first, you can claim it after the month is over.
- Elect an amount at open enrollment Spread across your paychecks. A $7,500 election over 26 paychecks is $288.46 each.
- Pay your provider as usual Keep receipts showing the dates of care, the amount and the provider's name and tax ID.
- Submit claims after the care Many administrators let you set up recurring claims for daycare so you're reimbursed each month automatically.
- File Form 2441 with your tax return It reconciles the benefits on your W-2 with your actual expenses and providers.
Changing your election mid-year
Dependent care elections are more flexible than health FSA elections. Besides life events like a birth or marriage, you can usually change your election when your care costs or provider change. Common examples:
- Your daycare raises its rates or you move your child to a more expensive center.
- Your child starts kindergarten and moves from full-day care to after-school care, which costs less.
- A relative starts providing free care, or stops.
- Your child turns 13 and no longer qualifies.
The earned income limit
Your tax-free dependent care benefits can't be more than your earned income or, if you're married, your spouse's, whichever is lower. For most two-earner families this never binds, because both incomes are well above $7,500. It matters when one spouse works part-time, starts a business partway through the year or isn't working.
- A spouse with no earnings generally means no tax-free benefit, because the limit is $0.
- A spouse who is a full-time student or unable to care for themselves is treated as earning $250 a month with one qualifying person, or $500 a month with two or more, for each month they're in school or disabled.
- Single parents use their own earned income, which is rarely the limiting number, and can elect the full $7,500 if their employer's plan allows it.
- Married couples filing separately each have a $3,750 limit, and the earned income test still applies to both spouses.
If you expect the earned income limit to apply, enter the lower-earning spouse's expected pay in the calculator. Any election above it becomes taxable income at the end of the year, so it's better to elect less from the start. If a spouse's work situation changes during the year, that also counts as a change in status, which lets you adjust the election to match.
FSA or the child and dependent care credit?
You can't use the same expenses for both the FSA and the child and dependent care tax credit. Expenses up to the FSA amount reduce what you can claim for the credit. For most families with earnings in the 22% bracket or higher, the FSA saves more, because it also avoids the 7.65% FICA tax and state income tax.
Lower-income families should compare. The credit's rules also changed for 2026, so run both through your tax software or ask a preparer before open enrollment.
For employers: should you adopt the $7,500 limit?
For most companies, yes. It costs the company nothing except the plan amendment, and it saves 7.65% in payroll tax on every extra dollar employees elect. The main thing to watch is nondiscrimination testing: dependent care FSAs can't favor highly compensated employees, and a higher limit makes it easier for them to fail the 55% average benefits test.
Dependent care help is one of the benefits parents notice most. Our guide to health benefits that attract talent covers others.
