Dependent Care FSA Contribution Increase: FAQs for Employers
With the signing of the One Big Beautiful Bill Act (OBBBA) into law by President Trump in July 2025, an important update for our Reimbursement Account Services clients is the Dependent Care FSA contribution increase. Starting January 1, 2026, the Dependent Care FSA limit will increase to $7,500, and $3,750 for married couples filing separately. Organizations like P&A Group have supported this increase for many years. This change is welcome news for working parents!
To help employers navigate this update, we’ve created an FAQ page to help guide you and answer questions surrounding this exciting update.
Action Required: Employer Requirements
Employers will be required to complete P&A’s Amendment Request Form. P&A has provided a copy of the form to all Dependent Care FSA clients via email. To request a link to the form, please contact your P&A Account Executive.
If your plan renews January 1, 2026, we kindly request that you complete the Amendment Request Form by December 1, 2025. If your plan renews on a different date, we ask that you complete the form during your FSA renewal process/Open Enrollment period.
The new maximum increase is not a mandatory change. If you do not want to adopt the new amount, please select this option on the Amendment Request Form.
The amendment fee is $125.
No. An amendment is only required if you want to allow for the Dependent Care FSA increase.
Currently, the plan documents only allow for an auto increase for the Health FSA because this type of change was not previously allowed for Dependent Care FSAs. Due to the new change for Dependent Care FSAs, the legal plan documents will require an update if you choose to adopt the contribution increase. The amendment will include language to allow for future auto-increases to this account type, so going forward, future increases will not require an amendment.
Questions Specific to Non-Calendar Year Plans
All mid-year plans will have to wait for their 2026 renewal date to adopt this change. If you would like to adopt the new limit when your plan renews, an amendment will need to be processed prior to your plan’s renewal date. For instance, if your plan renews on July 1, 2026, an amendment request will need to be completed prior to July 1, 2026.
No. Participants who do not have a calendar FSA plan will have to wait until the plan’s 2026 renewal date.
No. Because your FSA plan is on a non-calendar year, you will have to wait until 2026 to complete the required nondiscrimination testing.
Communications & Support
P&A’s sales and marketing team is available to provide customized plan FSA summaries known as “Cheat Sheets” that include language about the new increase. Our team is also available to provide additional support if needed. Please contact your P&A Account Executive to request a “Cheat Sheet” or to discuss additional options.