hold on there's just too much going on in Congress lmao...
Tax credit for small employers' startup costs for dependent care FSAs.
Rep. Smith (R-NE), Davis (D-IL), Moran (R-KS)
Introduced in House, referred to Ways and Means Committee.
The bill creates a new tax credit under Section 45BB of the Internal Revenue Code for small employers (those with 100 or fewer employees) to cover startup costs like plan setup, administration, and employee education for dependent care flexible spending accounts (FSAs). The credit is up to $5,000 per year for the first three years, limited to $500 or $250 per non-highly-compensated employee. Sponsor Adrian Smith (R-NE) sits on the Ways and Means Committee, which will consider the bill. Being in committee means it hasn't had a floor vote yet.
Introduced Mar 12, 2026
This bill is under review by a committee. The committee holds hearings, gathers testimony from experts and stakeholders, and may propose amendments. If the committee votes to advance it, the bill moves to the full chamber for debate and a vote.
If your employer is a small business with fewer than 100 employees, they might be more likely to set up a dependent care FSA because the credit covers initial costs like plan paperwork and employee sign-up sessions. If they do, you could use pre-tax money from your paycheck to pay for childcare, reducing your taxable income. Employers can claim the credit for up to three years, with a maximum of $5,000 per year, making it easier to absorb the upfront expense.
Supporters Say
Supporters say it helps small businesses offer a valuable employee benefit without high upfront costs.
Critics Say
Critics argue the credit is small and may not be enough to encourage many employers to set up plans.
Proponents, including small business groups, note that dependent care FSAs help employees save on childcare and improve retention. Critics point out that the $5,000 cap and three-year limit might not offset administrative burdens for the smallest firms, and that the credit is non-refundable, so very small businesses with no tax liability won't benefit.