Increase dependent care FSA limit to match rising costs
  1. United States
  2. N.J.
  3. Letter

Increase dependent care FSA limit to match rising costs

To: Sen. Menendez, Sen. Booker

From: A constituent in West Orange, NJ

May 10

The current annual limit of $5,000 on dependent care flexible spending accounts (FSAs) is woefully inadequate for covering the high costs of child care today. According to a recent report from the U.S. Department of Labor, the median yearly price for just one child in center-based infant care ranged from $8,310 to $17,171 in 2022. These exorbitant costs represent between 8% and 19.3% of median family income per child, creating an untenable financial burden for many families. While dependent care FSAs provide a valuable tax benefit by allowing employees to pay for eligible expenses with pre-tax dollars, the $5,000 cap renders this benefit largely ineffective for offsetting true child care expenses. This contribution limit has remained stagnant for decades, failing to keep pace with the rapidly rising costs of care. To provide meaningful financial relief to working families, it is imperative that the annual dependent care FSA contribution limit be increased substantially. Raising the cap to $10,000 or $20,000 would cover a much larger portion of child care costs and ensure this intended tax advantage can actually achieve its purpose of making quality care more accessible and affordable. Updating the dependent care FSA limit is a worthy endeavor that would tangibly improve the financial well-being of employees with dependent care responsibilities. I urge you to take action to increase this limit and provide genuine support for the modern family.

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