For the first time since 1986, the annual contribution limits for Dependent Care Flexible Spending Accounts (DCFSAs) are increasing. Under the One Big Beautiful Bill Act, employers can raise the cap on employee contributions beginning January 1, 2026. But the increase is not automatic.
What's Changing?
- $7,500 for individuals and married couples filing jointly (up from $5,000)
- $3,750 for married individuals filing separately (up from $2,500)
This Benefit Is Optional
The law authorizes the increase but doesn't require it. Employers should amend their cafeteria plan documents to reflect the new limits by December 31, 2025. Inaction now likely means no increase until at least 2027 for calendar-year plans.
How to Implement
Review current participation rates, adopt the amendment, coordinate with your TPA to update systems, and ensure employee communications clearly reflect the new limits.
