With the support of the American Business Coalition, Corporate Voices has been working with key members of both House and Senate to increase the contribution limit on Dependent Care Flexible Spending Accounts (DCFSA) to $7,500. The limit on DCFSAs has remained at $5,000 since 1986. If the limit were to be raised to $7,500, the incremental cost savings to an employer would be $191.25 per employee , which results in a total of $573.75 per employee. If you have a workforce of 20,000 and with a low take-up of six-percent (1200 employees) and everyone takes the full $7,500 – an employer would save $688,500 in payroll taxes. If an employer could increase DCFSA utilization to ten-percent, an employer could save over $1M.
Key Legislation
- Expanding Dependent and Child Care Act of 2009 (H.R. 2298)
Sponsor: Rep. John Yarmuth (D-KY 3)
This bill will expand DCFSA by increasing the exclusion amount to $7,500 for families and indexing the cap to inflation on an annual basis, thus providing more financial relief to parents coping with rising child and adult care costs.
Action: Currently we are meeting with the Offices of members on the Ways and Means Committee in order to build co-sponsorship. Our goal is to have a significant amount of support for our language to be included on any upcoming major tax legislation.
- Family Tax Relief Act of 2009 (S. 997)
Sponsor: Sen. Blanche Lincoln (D-AR)
This bill will increase the dollar limitation on the tax exclusion for employer-provided dependent care assistance payments to $7,500, while at the same time indexing the cap to inflation on an annual basis.
Action: Currently we are meeting with the Offices of members on the Senate Finance Committee in order to build co-sponsorship and raise awareness in case the House bill passes first. Our goal is to have a significant amount of support for our language to be included on any upcoming major tax legislation.