As a result of the American Rescue Plan Act of 2021 signed into law by President Biden in March, the 2021 contribution limits for dependent care flexible spending accounts has increased from $5,000 to $10,500 for single taxpayers and married couples filing jointly and $2,500 to $5,250 for married taxpayers filing separately. This increased limit could lead to tax savings of more than $3,500 based on individual tax rates.
It’s important to note that employers are not required to allow employees to contribute the higher amounts.
The contribution limit increase applies only to the 2021 calendar year. This includes plans with effective dates between January 1, 2021, and December 31, 2021.
Contact your Cornerstone representative for more information.