As we head into benefit election season, there’s some great news for anyone managing childcare or other dependent care expenses. For the first time in more than 40 years, the annual contribution limits for Dependent Care FSAs are getting a well-deserved boost — effective January 1, 2026.
Here’s what’s changing:
- Single or Married Filing Jointly: The contribution cap increases from $5,000 to $7,500 per year.
- Married Filing Separately: The limit increases from $2,500 to $3,750 per year.
That’s a 50% increase, giving families a greater opportunity to save on dependent care costs using pre-tax dollars — which also helps lower your taxable income.
Just keep in mind that Dependent Care FSAs are “use it or lose it” accounts, meaning you’ll forfeit any funds you don’t use by the end of the plan year. It’s smart to set aside only what you’re confident you’ll spend.
If you’re not sure how much to contribute or want to see how this change fits into your overall financial plan, our team is always here to help you make informed decisions.
