The increase was enacted in the One Big Beautiful Bill Act (P.L. 119-21, section 70404), which amended Internal Revenue Code section 129. The dollar amount is written into the law rather than adjusted each year by the IRS, so a new figure would normally require a new law. Confirm the cap in your plan documents, because an employer is not required to raise its own limit to match.
Who and what qualifies
- Care for a child under 13, or a spouse or dependent who cannot care for themselves, so that you (and your spouse) can work or look for work.
- The amount is also capped at the lower of the two spouses’ earned income.
- It is a household limit: both spouses’ elections together cannot exceed it.
- It is separate from the health FSA and does not affect HSA eligibility.
Worked example
| Item | Amount |
|---|---|
| Annual election at the limit | $7,500 |
| Per biweekly paycheck (26) | $288.46 |
| Per monthly paycheck (12) | $625.00 |
| Estimated tax saved at 22% federal + 7.65% FICA | $2,224 |
| Under the old $5,000 limit, tax saved | $1,482 |
The tax estimate is an illustration for a 22% bracket and no state income tax; the child and dependent care credit and the FSA interact, so many families need to choose between them or split expenses. A tax professional or Form 2441 instructions can help.
Sources: P.L. 119-21 (text of H.R. 1); IRS Form 2441. Checked October 18, 2026.
Related: health FSA limit · FSA carryover · 2027 limits hub.
This is general information, not tax or insurance advice. Confirm details with your plan documents, the IRS and a qualified professional.
General education, not insurance, tax or legal advice. Figures from IRS and HHS publications; confirm with your plan documents.