For most of living memory, the Dependent Care FSA (DCAP) ceiling sat at $5,000. That number felt frozen while daycare invoices kept climbing. For the 2026 tax year, the statutory limit is $7,500 for single filers and married couples filing jointly ($3,750 if married filing separately).
This isn’t an IRS inflation tweak. It came through Pub. L. 119-21 (commonly called the One Big Beautiful Bill Act), and — importantly — the new cap is not indexed for inflation. Until Congress moves again, $7,500 is the number. Plan documents still need to allow the higher amount before employees can elect it.
What still trips people up
Dependent care accounts are not “medical FSAs with a different label.” Eligible expenses have to enable the employee (and spouse, if applicable) to work or look for work. Overnight camps, tuition for kindergarten and above, and care provided by a tax dependent usually don’t qualify. Summer day camp often does.
Also: unlike a health FSA, dependent care reimbursements generally track contributions as they go in. Employees who front-load big January daycare bills need a clear explanation of timing.
Employer checklist
- Amend cafeteria plan documents if they hard-coded $5,000.
- Update open-enrollment calculators and examples.
- Remind employees that the federal Child and Dependent Care Tax Credit interacts with DCAP elections — more FSA usually means less credit, and the right mix depends on their tax situation.
If you didn’t highlight this during fall OE, it’s not too late for a mid-January reminder. Parents notice when the math finally moves.