2026 Dependent Care FSA Limit
The 2026 Dependent Care FSA Limit is $7,500.
Effective 2026-01-01Source: Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits (IRS)Verified 2026-08-29
Compared with 2025
| Item | 2025 | 2026 | Change |
|---|---|---|---|
| Exclusion limit | $5,000 | $7,500 | +$2,500 (+50.0%) |
Who it applies to
Employees who participate in a dependent care assistance program (DCAP) through their employer's cafeteria plan, and the employers that sponsor these plans.
What changed this year, and why
For the 2026 tax year, the IRS raised the annual Dependent Care FSA exclusion limit from $5,000 to $7,500.
Common questions
- What is the Dependent Care FSA exclusion limit for 2026?
- For the 2026 tax year, an employee can exclude up to $7,500 of benefits received under a dependent care assistance program from gross income.
- How does the 2026 limit compare to prior years?
- In 2025, the exclusion limit was $5,000. The 2026 limit of $7,500 represents an increase.
- Can the full exclusion amount always be claimed?
- No. The exclusion cannot exceed the smaller of the earned income of the employee or the employee's spouse. Special rules apply for a spouse who is a student or unable to care for themselves.
Every amount on this page is a published figure rather than yours. The Dependent care FSA headroom takes the number you enter and works it out against them, showing which published figure it used.
What counts as a dependent care benefit
Three kinds of employer-provided assistance count as dependent care benefits for purposes of the exclusion or deduction. First, cash payments your employer makes directly to you or to your care provider for the care of a qualifying person while you work. Second, the fair market value of care provided in a daycare facility that your employer operates or sponsors. Third, pre-tax salary-reduction contributions you make through a dependent care flexible spending arrangement (FSA). Even though your take-home pay is reduced to fund the FSA contributions, the IRS treats them as dependent care benefits you received from your employer. Your employer reports the total of all such benefits on your wage statement. You then enter that total as the starting point when figuring how much of your benefits you can exclude from income or deduct. A separate set of limits - the smallest of your total benefits, your qualified expenses, your earned income, your spouse's earned income, and the plan maximum - then determines the excludable amount.
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 (2025), Child and Dependent Care Expenses (IRS)
Your exclusion is the smallest of five amounts
Your dependent care benefits are not automatically fully excludable from income. The IRS caps the exclusion at the smallest of five amounts. First, the total dependent care benefits you received during the year. Second, the total qualified expenses you actually incurred during the year. Third, your earned income for the year. Fourth, your spouse's earned income. Fifth, the maximum amount allowed under your employer's dependent care plan. This means that even if you contributed the maximum to a dependent care flexible spending arrangement, you cannot exclude more than your earned income, your spouse's earned income, or your actual qualified expenses - whichever is lower. For a dependent care assistance program, the plan maximum is $7,500. If any of the other four amounts is smaller than $7,500, that smaller amount becomes your actual exclusion limit. The definition of earned income for this purpose is the same as for the credit, except it does not include any dependent care benefits you receive.
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.
Publication 503 (2025), Child and Dependent Care Expenses (IRS)
A spouse with no earned income can wipe out the benefit
The earned income limit restricts how much of your work-related expenses you can use to figure your dependent care credit. If you are single at the end of the year, your work-related expenses cannot exceed your own earned income for the year. If you are married at the end of the year, your work-related expenses cannot exceed the smaller of your earned income or your spouse's earned income. This means that if your spouse has no earned income during the year, the smaller amount is zero, and you cannot claim any credit for dependent care expenses. Even if you paid thousands of dollars for qualifying care, a spouse with no earned income wipes out the benefit entirely. There is an exception for a spouse who is a full-time student or who is physically or mentally unable to care for themselves, in which case that spouse is deemed to have earned income for each month they meet the condition. For purposes of the married limit, you use your spouse's earned income for the entire year even if you were married for only part of the year.
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 (2025), Child and Dependent Care Expenses (IRS)
Which child or adult the care has to be for
To claim the dependent care credit or exclusion, the care must be for one or more qualifying persons. A qualifying person falls into one of three categories. First, your qualifying child who is your dependent and who was under age 13 when the care was provided. This is the most common category and covers children below the age threshold. Second, your spouse who was not physically or mentally able to care for themselves and who lived with you for more than half the year. Third, any other person who was not physically or mentally able to care for themselves, who lived with you for more than half the year, and who was either your dependent or would have been your dependent except for certain technical reasons such as having too much gross income or filing a joint return. In all cases, the person must have lived with you for more than half the year (except for a child of divorced or separated parents, where special rules may apply). You must identify each qualifying person by name and taxpayer identification number on your tax return.
Who Is a Qualifying Person? Your child and dependent care expenses must be for the care of one or more qualifying persons. A qualifying person is: 1. Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart, later); 2. Your spouse who wasn't physically or mentally able to care for themselves and lived with you for more than half the year; or 3. A person who wasn't physically or mentally able to care for themselves, lived with you for more than half the year, and either:
Publication 503 (2025), Child and Dependent Care Expenses (IRS)
Using the FSA shrinks the dependent care credit
When you receive dependent care benefits through a flexible spending arrangement and exclude those benefits from your income, two consequences follow for the dependent care credit. First, the excluded benefits cannot be counted as work-related expenses when you figure your credit. This means that expenses paid with pre-tax FSA dollars are not eligible for the credit. Second, the excluded benefits reduce the dollar limit that would otherwise apply to your credit. For example, if you would normally be able to claim up to a certain dollar limit of expenses for the credit, the amount you exclude through the FSA shrinks that limit dollar for dollar. This tradeoff is important because the credit rate on remaining expenses may be lower than the tax savings you received from the FSA exclusion. You should compare the tax benefit of excluding FSA amounts against the credit you give up on those same expenses to determine which approach saves you more. The reduced dollar limit is applied after subtracting the excluded benefits from the maximum expense amount, which for 2026 is $7,500.
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 (2025), Child and Dependent Care Expenses (IRS)
The statement your employer must give you, and going over the cap
Your employer must provide you with a Form W-2 or similar statement showing the total amount of dependent care benefits provided to you during the year. This amount appears in box 10 of the form. If the benefits you received exceed the maximum amount allowed to be excluded from income, your employer will include the excess in your wages shown in box 1 of your Form W-2. For 2026, the maximum exclusion for a dependent care assistance program is $7,500. Any amount above $7,500 that your employer contributes to your dependent care FSA is treated as taxable wages and is subject to income tax withholding and employment taxes. You cannot exclude the excess even if you actually spent it on qualifying dependent care expenses. This is why it is important to monitor your FSA contributions throughout the year and not exceed the limit. The excess amount reported in box 1 increases your adjusted gross income and may affect other tax benefits that depend on your income level.
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.
Publication 503 (2025), 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 15-B (2026), Employer's Tax Guide to Fringe Benefits (IRS)
- Exclusion limit
Dependent care assistance Exempt3 up to certain limits, $7,500 ($3,750 for married employee filing separate return)