# Plain Language Summary: Improving Child Care for Working Families Act of 2021

Right now, if your employer offers a dependent care assistance program—basically a benefit where they help you pay for child care with pre-tax money—there's a limit on how much you can set aside. That limit is currently $5,000 per year for most families. This bill would double that limit to $10,500, meaning you could set aside twice as much money for child care expenses before taxes are taken out.

Here's why this matters in real terms: If you're paying $15,000 a year for child care and your employer offers this benefit, you could currently only exclude $5,000 from your taxable income. That means you'd pay taxes on the remaining $10,000. Under this bill, you could exclude $10,500, so you'd only pay taxes on $4,500 of your child care costs. For a family in a higher tax bracket, this could save hundreds of dollars per year. The bill also adjusts the limit for married couples filing separately to half the main amount, so they'd each get $5,250 instead of $2,500.

The change would apply to any money you set aside starting in the calendar year after the bill becomes law. This is designed to help working parents—particularly those with moderate to higher incomes who have access to these employer programs—manage the significant cost of child care. It won't directly help families whose employers don't offer this benefit, but for those who do have access, it provides meaningful tax relief on one of their biggest household expenses.

Improving Child Care for Working Families Act of 2021

Axne, Cynthia

Improving Child Care for Working Families Act of 2021 This bill increases the limitation on the exclusion from employee gross income for employer-paid dependent care assistance from $5,000 to $10,500.