Bipartisan Bill Would Increase Contribution Limits for Dependent Care Assistance Plans

April 09, 2021

New legislation would permanently increase the tax-free dollars employees and their employers can set aside for use toward child and dependent care expenses to $10,500.

Congress increased the contribution amount to $10,500 in the American Rescue Plan, but only for the 2021 tax year.  The Improving Child Care for Working Families Act would make it permanent.

Bipartisan, bicameral bill:  Senators Joni Ernst (R-IA), Maggie Hassan (D-NH), Kyrsten Sinema (D-AZ), and Thom Tillis (R-NC), along with Representatives Cynthia Axne (D-IA) and Brian Fitzpatrick (R-PA) introduced the bill.

Outlook:  The measure could be included in the next budget reconciliation (infrastructure) bill, which only requires 51 votes in the Senate to pass.