2026 update: the DCFSA limit rose to $7,500 — plan amendments due
The employer's guide to the Dependent Care FSA
Everything HR and benefits teams need to offer, amend, test, and administer a Dependent Care FSA — including what the 2026 IRS limit increase actually requires you to do.
2026 employee limit
$7,500
Up from $5,000 in 2025
Your FICA savings
7.65%
Employer-side payroll tax you avoid on every dollar contributed
Plan amendment
Required
Your Section 125 document must be updated before employees can use the new limit
Source: IRS Publication 503, Child and Dependent Care Expenses. Limit increase enacted under the One Big Beautiful Bill Act (OBBBA).
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Upload your census, get an instant read on the 55% average benefits test, key employee concentration, and the 5% owner test — plus a shared checklist to track your 2026 plan amendment.
What offering one actually involves
Amend or adopt your plan
Update your Section 125 cafeteria plan document to reflect the 2026 limit before your next enrollment window.
Run nondiscrimination testing
DCAPs face their own 55% average benefits test, on top of the standard key employee and owner tests.
Communicate to employees
Most employees won't know the limit changed — a clear announcement drives adoption of a benefit that costs you little to offer.
Explore the guide
How to Set Up a Dependent Care FSA
The plan document, payroll, and administrator steps to launch a compliant DCAP.
Nondiscrimination Testing
The 55% average benefits test, key employee concentration, and owner limits — explained.
2026 Plan Amendment Checklist
What to update, and by when, to reflect the new $7,500 limit.
Choosing a Plan Administrator
What to evaluate — cost, claims turnaround, integrations — before you sign a TPA contract.
Employer ROI Calculator
See your actual FICA savings from offering a DCFSA, based on expected participation.
Employer FAQ
ERISA status, COBRA, cost to administer, and other common questions.