Congressman Sensenbrenner Introduces the Working Parents Tax Relief Act to Help Working Families
“Changes to the Dependent Care Assistance Program are necessary to give our hardworking families a hand up and ensure our businesses have a focused, productive workforce.”
WASHINGTON, D.C. – Today, Congressman Jim Sensenbrenner introduced the Working Parents Tax Relief Act, legislation that would amend the Internal Revenue (IRS) Code of 1986 in order to help make the cost of childcare more affordable for Wisconsin families.
Under the employer-sponsored Dependent Care Assistance Program, eligible employees may reduce their taxable income by setting aside money from their paycheck, prior to taxes being taken out, to pay for dependent care expenses, including child care, elder care and extended care.
Currently, individuals may only set aside $5,000 per year and are unable to roll-over unused funds to the next year.
Sensenbrenner’s Working Parents Tax Relief Act would increase the amount available under DCAP from $5,000 to $7,500, index the benefit amount to inflation, and allow plan participants to roll-over unused funds into the following year.
Congressman Sensenbrenner: “The cost of reliable, quality dependent care, especially childcare, has risen dramatically over the years. Changes to the Dependent Care Assistance Program are necessary to give our hardworking families a hand up and ensure our businesses have a focused, productive workforce.”
- The Dependent Care Assistance Program (DCAP) acts as flexible spending account which can be used to pay for eligible dependent care expenses.
- Expenses must be incurred from the care of dependents under the age of 13, or older dependents incapable of caring for themselves, and must be needed to allow employees to work.
- The money set aside is pretax, which has the effect of lowering an individual’s taxable income. Under current law, each household may set aside up to $5,000 annually. This limit has been in effect since 1986, despite the fact that the cost of care has significantly increased.