2023 Dependent Care FSA Limit
The 2023 Dependent Care FSA Limit is $5,000.
Effective 2023-01-01Source: Publication 503 (2023), Child and Dependent Care Expenses (IRS)Verified 2026-08-30
Compared with 2022
Every figure on this page is unchanged from 2022.
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Exclusion limit | $5,000 | $5,000 | +$0 (+0.0%) |
Who it applies to
Employees who participate in a dependent care flexible spending arrangement or other employer-sponsored dependent care assistance program.
What changed this year, and why
The maximum amount an employee can exclude from income through a dependent care assistance program, including a dependent care flexible spending arrangement (FSA), is $5,000 for 2023. This is unchanged from 2022. For employees who are married and file separately, the exclusion limit is half of that amount. Any benefits received above this exclusion limit are reported as taxable wages on the employee's Form W-2.
Common questions
- Does the $5,000 limit apply per parent or per household?
- The $5,000 limit applies per household, not per parent. If married filing separately, the maximum exclusion is half of $5,000.
What counts as a dependent care benefit
For 2023, the IRS treats three kinds of employer-provided assistance as dependent care benefits. First, amounts your employer paid directly to you or your care provider for the care of your qualifying person while you work. Second, the fair market value of care in a daycare facility your employer provided or sponsored. Third, pre-tax contributions you made through a dependent care flexible spending arrangement. Even when your salary was reduced to fund these benefits, they still count. You report the total on Form 2441, Part III, line 12. If your employer sponsors a qualified plan, you can generally exclude the benefits from income (self-employed taxpayers claim a deduction instead). The exclusion, however, cannot exceed the smallest of several amounts—including the $5,000 cap the IRS sets for dependent care assistance programs in 2023.
Dependent care benefits in- clude: 1. Amounts your employer paid directly to either you or your care provider for the care of your qualifying per- son while you work, 2. The fair market value of care in a daycare facility pro- vided or sponsored by your employer, and 3. Pre-tax contributions you made under a dependent care flexible spending arrangement.
Publication 503 (2023), Child and Dependent Care Expenses (IRS)
Your exclusion is the smallest of five amounts
For 2023, the IRS caps how much of your employer-provided dependent care benefits you can exclude from income. The excludable amount is the smallest of five figures: the total benefits you received during the year, the total qualified expenses you incurred, your earned income, your spouse's earned income, or the maximum allowed under your plan. The IRS sets that plan maximum at $5,000 for 2023 ($2,500 if married filing separately). If you exclude benefits that exceed this cap, your employer must add the excess to the wages shown in box 1 of your Form W-2, so it is taxed as ordinary income. Married taxpayers who file separately face a lower $2,500 ceiling, making it especially important to coordinate with your spouse about who claims the benefit. The exclusion also reduces the dollar limit you can use when computing the child and dependent care credit, so any amounts excluded here cannot double-count toward the credit.
The amount you can exclude or deduct is limited to the smallest of: 1. The total amount of dependent care benefits you re- ceived during the year, 2. The total amount of qualified expenses you incurred during the year, 3. Your earned income, 4. Your spouse's earned income, or 5. The maximum amount allowed under your dependent care plan. For 2023, the maximum amount that can be excluded from an employee's income through a de- pendent care assistance program is $5,000 ($2,500 if married filing separately).
Publication 503 (2023), Child and Dependent Care Expenses (IRS)
A spouse with no earned income can wipe out the benefit
For 2023, the IRS requires that you (and your spouse if filing jointly) have earned income during the year to claim the child and dependent care credit. The work-related expenses you use to figure the credit cannot exceed your earned income if you are single, or the smaller of your earned income or your spouse's earned income if you are married. If your spouse had no earned income at all, the limit drops to zero, which eliminates the credit entirely. An important exception exists for a full-time student or a spouse who is physically or mentally unable to care for themselves: the IRS will deem that spouse to have earned income for each month they qualify, so the credit is not automatically lost. But absent one of those exceptions, a non-working spouse wipes out the earned-income limit and with it the credit.
Earned Income Limit The amount of work-related expenses you use to figure your credit can't be more than: 1. Your earned income for the year if you are single at the end of the year, or 2. The smaller of your or your spouse's earned income for the year if you are married at the end of the year.
Publication 503 (2023), Child and Dependent Care Expenses (IRS)
Which child or adult the care has to be for
The IRS requires that dependent care expenses be incurred for the care of a qualifying person. A qualifying person is generally your qualifying child who is your dependent and who was under age 13 when the care was provided. It can also be your spouse if the spouse was physically or mentally unable to care for themselves and lived with you for more than half the year. Additionally, any other person who was physically or mentally unable to care for themselves may qualify, provided you could claim them as a dependent (or would have been able to except that they had too much gross income, filed jointly, or you were claimed as a dependent by another taxpayer). If the care is not for one of these individuals, the expenses do not count toward the dependent care credit or the exclusion, regardless of how much you actually spent.
Qualifying Person Test. The care must be for one or more qualifying persons who are identified on Form 2441. (See Who Is a Qualifying Person, later.)
Publication 503 (2023), Child and Dependent Care Expenses (IRS)
Using the FSA shrinks the dependent care credit
For 2023, if you exclude dependent care benefits from your income, the IRS reduces the dollar limit you can use when computing the child and dependent care credit. Specifically, the excluded benefits are not included in your work-related expenses and they reduce the overall dollar limit available for the credit. In other words, dollars sheltered through the FSA cannot also be counted toward the credit. The practical effect is that using pre-tax dollars to pay for care shrinks the pool of expenses eligible for the credit, so taxpayers should compare the tax savings from the exclusion against the credit they give up. The $5,000 exclusion cap further limits how much can be sheltered tax-free each year, and any excess over that amount is reported as taxable wages on your Form W-2.
Effect of exclusion on credit. If you exclude dependent care benefits from your income, the amount of the exclu- ded benefits: 1. Isn't included in your work-related expenses; and 2. Reduces the dollar limit, discussed later.
Publication 503 (2023), Child and Dependent Care Expenses (IRS)
The statement your employer must give you, and going over the cap
Each year your employer must give you a Form W-2 (or similar statement) that reports in box 10 the total dependent care benefits provided to you under a qualified plan. If those benefits exceed the maximum amount the IRS allows to be excluded, your employer must also add the excess to the wages shown in box 1 of your W-2 so that the overage is taxed as ordinary income. For 2023, the exclusion cap is $5,000 (or $2,500 if you are married filing separately). Any amount above that threshold comes back to you as taxable wages. You report the benefits on Form 2441, Part III, and the same dollar limit applies whether you are taking the exclusion as an employee or the deduction as a self-employed taxpayer.
Statement for employee. Your employer must give you a Form W-2 (or similar statement), showing in box 10 the to- tal amount of dependent care benefits provided to you during the year under a qualified plan. Your employer will also include in your wages shown in box 1 of your Form W-2 any dependent care benefits that exceed the maxi- mum amount of dependent care benefits allowed to be ex- cluded. The maximum amount is $5,000 ($2,500 if mar- ried filing separately).
Publication 503 (2023), Child and Dependent Care Expenses (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 503 (2023), Child and Dependent Care Expenses (IRS)
- Exclusion limit
For 2023, the maximum amount that can be excluded from an employee's income through a de- pendent care assistance program is $5,000 ($2,500 if married filing separately).