This bill changes the tax rule that covers employer-provided dependent care assistance (Internal Revenue Code section 129). It raises the current exclusion limit from $5,000 to $10,000 per year (and from $2,500 to $5,000 for separate filers). The bill also requires the dollar amounts in section 129 to be adjusted each year for inflation using the IRS cost-of-living measure, with increases rounded to the nearest $50. The bill removes one existing subparagraph (D) from section 129(a)(2). The changes take effect for calendar years beginning after December 31, 2024.
If your employer offers a dependent care assistance program or you use a dependent care flexible spending account, the amount you can set aside or exclude from taxable income would be doubled under this bill (from $5,000 to $10,000, or $2,500 to $5,000 for those filing separately). Future maximum amounts would rise automatically with inflation each year, rounded to the nearest $50.
No publicly available information on estimated federal budget effects, tax revenue changes, or administrative costs is included in the provided text.
The bill text and short title show supporters intend to increase the dependent care contribution limit and index it to inflation so the benefit keeps pace with rising costs.
No publicly available information on objections, alternative proposals, or opponents' arguments is included in the provided text.