For forty years the dependent care FSA limit was $5,000. It survived every inflation cycle since the Tax Reform Act of 1986 without moving, apart from a single pandemic-year bump to $10,500 that expired after 2021. Child care prices did not stay still for those forty years.
That changed for 2026. The number to know is $7,500, and the number to double check is whatever your own plan document says, because those two are often not the same. Every figure below was verified against primary sources on September 6, 2026. This is a summary of published rules, not tax advice for your return.
The 2026 Dependent Care FSA Limits
| Tax year | Single, head of household, or married filing jointly | Married filing separately |
|---|---|---|
| 2024 | $5,000 | $2,500 |
| 2025 | $5,000 | $2,500 |
| 2026 | $7,500 | $3,750 |
| 2027 | $7,500 under current law | $3,750 under current law |
The 2027 row is current law rather than a published IRS figure. No 2027 amount has been announced, and as explained below, none is coming.
Three independent primary sources carry the 2026 pair and they agree. The statutory text of section 129(a)(2)(A) at the U.S. Code caps the exclusion at $7,500 ($3,750 for a separate return by a married individual). IRS Publication 15-B for 2026 tells employers the limit “was raised from $5,000 to $7,500” and that an employee can generally exclude up to $7,500 ($3,750 if married filing separately). FSAFEDS, the federal government’s own program, lists $7,500 and $3,750 on its enrollment page and footnotes both as the IRS annual contribution limit for 2026.
One source disagrees, and it is worth naming so you do not get tripped by it. IRS Publication 503 is still the 2025 edition, revised November 18, 2025, and it correctly states the 2025 limit of $5,000 ($2,500 married filing separately) along with a 35% top credit rate. It is a Tier 1 IRS page serving a figure that is no longer current for 2026. Use it for the mechanics it describes, not for this year’s cap.
What Actually Changed
Section 70404 of Public Law 119-21, the One Big Beautiful Bill Act, signed July 4, 2025, amended section 129(a)(2)(A) by striking “$5,000 ($2,500” and inserting “$7,500 ($3,750”. The effective date provision in section 70404(b) reads: “The amendment made by this section shall apply to taxable years beginning after December 31, 2025.”
Two independent reads confirm this. The enrolled bill text on GovInfo carries the amendment and the effective-date language above. The current statutory compilation at the U.S. Code shows the $7,500 in the operative text, with an amendment note recording that Public Law 119-21 substituted “$7,500 ($3,750” for “$5,000 ($2,500” in 2025 and an effective-date note repeating the December 31, 2025 cutoff. The two agree exactly.
The same law also rewrote the child and dependent care credit under section 21, effective for the same tax years, raising the starting percentage to 50% with floors at 35% and 20%. That comparison lives on dependent care FSA and in detail on the child and dependent care tax credit.
It is not indexed. Section 129 has no cost-of-living adjustment provision at all. Mercer’s analysis of the law states plainly that these amounts are not indexed for inflation. That is the quiet catch in the increase: the health FSA limit gets re-set by the IRS every October, but $7,500 will still be $7,500 in 2030 unless Congress acts again.
The Cap Is the Law’s Ceiling, Not Your Employer’s Offer
This is the part that surprises people at open enrollment.
Section 129(d)(1) defines a dependent care assistance program as a separate written plan of an employer. The maximum election lives in that written plan. The Internal Revenue Code says how high a plan is permitted to go; it does not require any employer to go there, and nothing in Public Law 119-21 obligated plan sponsors to adopt the increase for 2026.
Mercer told employers considering an increase to amend their plan documents before the beginning of the 2026 plan year, which for a calendar-year plan meant January 1, 2026. Plans that did not amend in time are still running a $5,000 cap, legally and correctly. There is no penalty on the employer for that and no way for you to elect above the plan’s number.
So the practical dependent care FSA limit for you is the lower of $7,500 and whatever your summary plan description says. Check the SPD or the open enrollment portal rather than assuming. If your plan is still at $5,000, that is a reasonable thing to raise with HR before the next plan year, since amending is a paperwork exercise rather than an employer cost.
What the Increase Is Worth in Dollars
Money in a dependent care FSA escapes federal income tax at your marginal rate and payroll tax at 7.65%, which is 6.2% for Social Security plus 1.45% for Medicare according to IRS Topic no. 751. States whose income tax follows the federal definition of wages exempt it too, which this table ignores.
Here is what the extra $2,500 of room is worth, using the 2026 rate schedule in Revenue Procedure 2025-32.
| Your federal marginal rate | Income tax avoided on the extra $2,500 | Payroll tax avoided | Total new saving |
|---|---|---|---|
| 12% | $300 | $191 | $491 |
| 22% | $550 | $191 | $741 |
| 24% | $600 | $191 | $791 |
| 32% | $800 | $191 | $991 |
| 35% | $875 | $191 | $1,066 |
The whole $7,500 election is worth roughly $1,474 at a 12% bracket, $2,224 at 22%, and $2,974 at 32%.
Two caveats on the payroll tax column. The 6.2% Social Security portion stops at the wage base, which Topic no. 751 puts at $184,500 of 2026 wages. Above that only the 1.45% Medicare rate applies, so the saving on the extra $2,500 drops from $191 to about $36 and the 35% row becomes closer to $911. And reducing your Social Security wages very slightly reduces the earnings record your future benefit is calculated from, which almost never outweighs the current-year saving but is a real trade.
Four Ways You Can End Up Under $7,500
Married filing separately halves it. The statute sets $3,750 for a separate return by a married individual. There is no way around this inside the account.
The earned income limit can wipe it out. Section 129(b) caps your exclusion at your own earned income if you are single, and at the lesser of your earned income and your spouse’s if you are married. A spouse who earns $4,000 caps the household exclusion at $4,000. Publication 503 supplies the one relief valve: a spouse who is a full-time student or is not able to care for themselves is treated as earning at least $250 a month with one qualifying person in the home, or $500 a month with two or more, which works out to $3,000 or $6,000 for a full year. Only one spouse can be deemed to have that income in any given month.
Highly compensated employee testing can claw it back. Section 129(d) bars a plan from discriminating in favor of highly compensated employees and requires that average benefits for non-highly-compensated employees be at least 55% of the average for highly compensated ones. Publication 15-B defines a highly compensated employee for 2026 as a 5% owner or someone paid more than $160,000 the prior year. When a plan fails the test, administrators cut back HCE elections, sometimes mid-year and sometimes retroactively at year end, and the excess becomes taxable income in box 1 of your W-2. Mercer flags that employers who already struggled with the 55% test may find the higher limit makes it harder to pass, precisely because HCEs are the ones who elect the most. What shows up on the form afterward is covered on dependent care benefits on your W-2.
Two working spouses do not get two limits. FSAFEDS states that if both spouses can contribute through their own employers, they may not each claim $7,500, and the same expense cannot be reimbursed from both accounts.
What This Limit Is Not
The dependent care cap is frequently confused with two unrelated numbers.
It is not the health FSA limit. The health FSA salary reduction limit sits in section 125(i) and is inflation-adjusted every year. Revenue Procedure 2025-32 sets it at $3,400 for tax years beginning in 2026, with a maximum carryover of $680 where the plan permits one. That $680 carryover is a health FSA feature only. A dependent care FSA has no carryover at all, only the possibility of a grace period of up to two and a half months if the plan offers one. The two accounts are separate elections with separate ceilings, and you can hold both.
It is not an HSA limit. HSA contribution ceilings come from section 223 and a different revenue procedure entirely, and they are unaffected by anything in section 129. See HSA contribution limits for those, and HSA vs FSA for how the account families differ on ownership, rollover, and portability.
The 2027 Number
There is no 2027 dependent care FSA limit to publish. Because section 129 carries no inflation adjustment, the IRS never issues an annual figure for it the way it does for the health FSA. Under current law 2027 is $7,500 and $3,750, the same as 2026.
Separately, the IRS had not released any tax year 2027 inflation revenue procedure as of September 6, 2026. That document normally lands in October and will carry the 2027 health FSA and carryover amounts. It will not carry a dependent care figure. Benefits sites publishing projected 2027 numbers right now are estimating, and for this particular limit they are estimating something that is fixed in statute.
The Bottom Line
For 2026 the dependent care FSA limit is $7,500, or $3,750 married filing separately, the first increase since 1986 and worth $491 to $1,066 of new tax savings a year depending on your bracket. It applies to taxable years beginning after December 31, 2025 and it is not indexed, so it will not move again on its own.
Before you elect, confirm three things: that your plan document actually adopted $7,500, that your lower-earning spouse’s earned income supports the amount, and that you will genuinely spend it, because a dependent care FSA has no carryover to catch an overestimate. Then check eligible expenses so you are not electing against spending the account cannot reimburse.