Dependent Care FSA Limit Rises to $7,500 in 2026 | HelloBooks The dependent care assistance exclusion is $7,500 for 2026, with a bigger dependent care credit rate. How the two now interact for parent clients.
The cap on tax-free dependent care benefits from an employer goes up for 2026, according to Publication 15-B, and the dependent care credit rate rises at the same time, so parents need the two compared.
Free Plan with invoices within 200 transactions, bills & quotes — no credit card.
2026 exclusion
$7,500
Applies: Tax year 2026From IRS.gov · checked October 10, 2026
Publication 15-B lists the 2026 exclusion for dependent care assistance as $7,500, or $3,750 for a married employee filing separately. Separately, the child and dependent care credit can reach 50% of expenses from 2026, on the same $3,000 and $6,000 expense caps.
Expenses paid with excluded benefits cannot also be used for the credit. For a family with two or more children and high care costs, the larger exclusion may now absorb most of the credit-eligible expenses, so model both before open enrollment.
Employers running a dependent care assistance program should confirm their plan document and payroll settings allow the higher limit. Report the benefits on the W-2 as before.
The plain-English summary for business owners
By client type · families with children
Business returns · employer credits
Families · adoption credit
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
Free Plan with full access to the AI accountant — no credit card, no time limit.