Tax Benefits #

Pre-tax savings: Contributions are exempt from federal income tax, Social Security tax, and Medicare tax.

Tax Advantages

Dependent Care FSAs can offer significant tax savings—often 20% to 40% of your eligible expenses depending on your tax bracket.

Example:

You contribute $5,000 to a DCFSA.

You avoid paying roughly $1,200–$2,000 in taxes (federal, Social Security, Medicare).

DCFSA vs. Childcare Tax Credit

You cannot double-dip, but you can:

Use both the DCFSA and the Child and Dependent Care Tax Credit strategically.

Example: Use DCFSA for the first $5,000, then apply the credit to any additional qualifying expenses (if eligible).