DEPENDENT CARE FSA VS CREDIT · RUNS IN YOUR BROWSER · NOTHING UPLOADED

Dependent care FSA or child care credit: which saves you more?

Enter your childcare spending, income and tax rates. You get the tax the FSA saves, the credit you would claim instead, and the best split between them, since every FSA dollar reduces the dollars the credit can use.

Nothing you type leaves this browser tab. Illustrative estimates, not advice. Not legal, tax, or financial advice.

Your household

US federal rules for tax years after 2025: FSA limit $7,500, credit expense cap $3,000 for one child and $6,000 for two or more, rate 50% falling to 20% as income rises. Flat rates you type in; confirm current-year figures.

Fill in your household, then click Compare.

How it is calculated

FSA: each dollar you elect saves your federal marginal rate plus your state rate plus the payroll tax rate you enter. Credit: expenses up to the cap, less your FSA election, times a rate that starts at 50%, drops one point for each $2,000 of AGI over $15,000 to 35%, then one more point per $2,000 over $75,000 ($150,000 joint) to 20%. FSA dollars lower AGI. Both are limited to the lower earner's income. The tool tries every election in $50 steps plus the maximum and shows the best.

Not modelled: state credits, married filing separately, employer plan limits, grace periods, provider and qualifying-person rules, and bracket edges. Unverified: checked by hand calculation and unit tests only. Have a tax professional review your situation.

Common questions

Should I use a dependent care FSA or the child care tax credit?

It depends on your marginal tax rate. The FSA saves your federal, state and payroll tax rates on every dollar you set aside, up to $7,500. The credit saves 20% to 50% of up to $3,000 (one child) or $6,000 (two or more) of expenses. Higher earners usually win with the FSA; lower earners often win with the credit. This tool compares them with your numbers.

Can I use both the FSA and the credit?

Yes, but not on the same dollars. Every dollar you run through the FSA reduces the expenses that count for the credit, dollar for dollar. Because the credit cap is only $3,000 or $6,000 while the FSA limit is $7,500, a large FSA election can use up the credit entirely. The tool tests every split and shows the best one.

What changed for 2026?

Federal law raised the dependent care FSA limit to $7,500 per household starting in 2026 and increased the child and dependent care credit rate for tax years after 2025, up to 50% at low incomes with a 20% floor at high incomes. Check the current year's figures with a tax professional or the IRS before relying on this.

Why is the lower earner's income asked for?

Both the FSA exclusion and the credit are limited to the earned income of the lower-earning spouse. If that income is smaller than your care costs, only that amount counts. Leave it blank if it is higher than your expenses.

Is the credit refundable?

No. It can only reduce your federal income tax to zero. If you know your tax before credits, enter it and the tool limits the credit to it. The FSA saves tax whether or not you owe income tax.

What is not modelled?

State credits, married filing separately, employer plans with lower limits, a grace period or carryover, care paid to relatives who cannot be claimed, the qualifying-person and provider rules, and tax at bracket edges. It applies flat rates you type in.

Is my household information uploaded anywhere?

No. Everything you type stays in this browser tab. There are no accounts, cookies or analytics vendors.