News & Analysis as of

Internal Revenue Code (IRC) Dependent Care Assistance Program (DCAP)

Woodruff Sawyer

​​​​​​​Employee Benefits Provisions in the One Big Beautiful Bill Act​​

Woodruff Sawyer on

On July 3, 2025, Congress passed a reconciliation bill (the “Reconciliation Act”) previously named the One Big Beautiful Bill Act, but subsequently redesignated “An Act to provide for reconciliation pursuant to title II of H....more

Ogletree, Deakins, Nash, Smoak & Stewart,...

Reminder: Dependent Care Assistance Is Now Excludable in Pennsylvania, Retroactive to 2023 Tax Year

With tax day quickly approaching on April 15, 2024, employers in Pennsylvania may want to take note of a December 2023 state tax law that might have flown under the radar. The law made employee contributions to...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

IRS Emphasizes Health FSA and Dependent Care Assistance Program Substantiation Requirements

On April 28, 2023, the Internal Revenue Service’s (IRS) Office of Chief Counsel released guidance reiterating claims substantiation rules for health flexible spending arrangements (health FSAs) under Internal Revenue Code...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

The IRS Giveth and Then Giveth Again: New DCAP Guidance Provides Welcome Tax Relief

Participants in dependent care assistance programs (DCAPs) will get the best of both worlds (at least in 2021) under new guidance from the Internal Revenue Service (IRS). In another of what appears to be a seemingly...more

Verrill

IRS Notice 2021-26 Clarifies Taxation of Dependent Care Assistance Programs:

Verrill on

On May 10, 2021, the IRS issued Notice 2021-26, which provides guidance regarding the taxation of dependent care assistance benefits provided through a Code Section 125 cafeteria plan, available in tax years ending in 2021...more

Bradley Arant Boult Cummings LLP

IRS Answers Questions on Taxation of DCAPs and COVID-19 Relief

The Internal Revenue Service (IRS) has published Notice 2021-26 to provide answers regarding the taxability of benefits received in 2021 and 2022 under a dependent care assistance program (DCAP) that permits carryovers or...more

Holland & Hart - The Benefits Dial

Nobody Puts Baby In the Corner . . . And the IRS Agrees, Providing Guidance on the Taxability of Dependent Care Assistance...

Yesterday the IRS released Notice 2021-26, which clarifies that if eligible dependent care benefits would have been excluded from income if used during either the prior tax year (2020 or 2021), these benefits remain...more

Troutman Pepper Locke

Increased Limit for Dependent Care Assistance Programs: Traps for the Unwary

Troutman Pepper Locke on

The American Rescue Plan Act of 2021 (ARPA), signed into law by President Biden on March 11, increases the amount employees can exclude from their 2021 gross taxable income for employer-provided dependent care assistance...more

McDermott Will & Emery

Weekly IRS Roundup March 1 – March 5, 2021

McDermott Will & Emery on

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 1, 2021 – March 5, 2021... March 1, 2021: The IRS issued Notice 21-20 providing guidance...more

Stinson LLP

IRS Guidance on CAA Coronavirus Relief for FSAs, DCAPs and Cafeteria Plans

Stinson LLP on

On February 18, 2021, the IRS issued Notice 2021-15, clarifying temporary special rules for cafeteria plans, health flexible spending accounts (FSAs) and dependent care assistance programs (DCAPs) that were included in the...more

Perkins Coie

IRS Notices Provide COVID-19 Relief Covering Section 125 Cafeteria Plans and Flexible Spending Account Benefit Plans

Perkins Coie on

Many employers have sought to leverage or make changes to their employer-sponsored benefits to address economic and health-related burdens faced by their employees during the COVID-19 pandemic. Until now, however, employers...more

Burr & Forman

Tax Reform Proposal Nixes Favorable Tax Treatment of Several Employee Benefits

Burr & Forman on

On November 3, 2017, House Ways and Means Committee Chairman Brody began the legislative consideration of Tax Reform by releasing an amendment (in the nature of a substitute) to the Tax Reform and Jobs Act (H.R. 1 hereinafter...more

Akin Gump Strauss Hauer & Feld LLP

Tax Cuts and Jobs Act

On November 2, 2017, the Committee on Ways and Means of the U.S. House of Representatives released its tax reform bill titled the Tax Cuts and Jobs Act (the “House Bill”). On November 6, 2017, Kevin Brady, Chairman of the...more

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