United States HR 7922: Small Business Dependent Care FSA Opportunity Act

Bill Text

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119TH CONGRESS
2D SESSION H. R. 7922
To amend the Internal Revenue Code of 1986 to provide a credit to certain
small employers for the startup costs of dependent care flexible spending
plans.
IN THE HOUSE OF REPRESENTATIVES
MARCH 12, 2026
Mr. SMITH of Nebraska (for himself, Mr. DAVIS of Illinois, and Mr. MORAN)
introduced the following bill; which was referred to the Committee on
Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
a credit to certain small employers for the startup costs
of dependent care flexible spending plans.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Small Business De-4
pendent Care FSA Opportunity Act’’. 5
SEC. 2. SMALL EMPLOYER DEPENDENT CARE FLEXIBLE 6
SPENDING PLAN STARTUP COSTS. 7
(a) IN GENERAL.—Subpart D of part IV of sub-8
chapter A of chapter 1 of the Internal Revenue Code of 9
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1986 is amended by adding at the end the following new 1
section: 2
‘‘SEC. 45BB. SMALL EMPLOYER DEPENDENT CARE FLEXI-3
BLE SPENDING PLAN STARTUP COSTS. 4
‘‘(a) IN GENERAL.—For purposes of section 38, in 5
the case of an eligible employer, the small employer de-6
pendent care flexible spending plan startup cost credit de-7
termined under this section for any taxable year is an 8
amount equal to the qualified startup costs paid or in-9
curred by the taxpayer during the taxable year. 10
‘‘(b) DOLLAR LIMITATION.—The amount of the cred-11
it determined under this section for any taxable year shall 12
not exceed— 13
‘‘(1) for the first credit year and each of the 2 14
taxable years immediately following the first credit 15
year, the greater of— 16
‘‘(A) $500, or 17
‘‘(B) the lesser of— 18
‘‘(i) $250 for each employee of the eli-19
gible employer who is not a highly com-20
pensated employee (as defined in section 21
414(q)) and who is eligible to participate 22
in the dependent care flexible spending 23
plan maintained by the eligible employer, 24
or 25
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‘‘(ii) $5,000, and 1
‘‘(2) zero for any other taxable year. 2
‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this 3
section— 4
‘‘(1) IN GENERAL.—The term ‘eligible em-5
ployer’ has the meaning given such term by section 6
408(p)(2)(C)(i). 7
‘‘(2) REQUIREMENT FOR NEW DEPENDENT 8
CARE FLEXIBLE SPENDING PLANS.—Such term shall 9
not include an employer if, during the 3-taxable year 10
period immediately preceding the 1st taxable year 11
for which the credit under this section is otherwise 12
allowable for a dependent care flexible spending plan 13
of the employer, the employer or any member of any 14
controlled group including the employer (or any 15
predecessor of either) established or maintained a 16
dependent care flexible spending plan for substan-17
tially the same employees as the employees for whom 18
the dependent care flexible spending plan with re-19
spect to which such credit is otherwise allowable is 20
established or maintained. 21
‘‘(d) OTHER DEFINITIONS.—For purposes of this 22
section— 23
‘‘(1) IN GENERAL.—The term ‘qualified startup 24
costs’ means any ordinary and necessary expenses of 25
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an eligible employer which are paid or incurred in 1
connection with— 2
‘‘(A) the establishment or administration 3
of a dependent care flexible spending plan, or 4
‘‘(B) education of employees with respect 5
to such plan. 6
‘‘(2) PLAN MUST HAVE AT LEAST 1 PARTICI-7
PANT.—Such term shall not include any expense in 8
connection with a plan that does not have at least 9
1 employee eligible to participate who is not a highly 10
compensated employee (as defined in section 11
414(q)). 12
‘‘(3) DEPENDENT CARE FLEXIBLE SPENDING 13
PLAN.—The term ‘dependent care flexible spending 14
plan’ means so much of any plan of an employer as 15
consists of dependent care flexible spending arrange-16
ments. For purposes of the preceding sentence, an 17
arrangement shall be treated as a dependent care 18
flexible spending arrangement only if employer con-19
tributions to such arrangement are excludible from 20
the gross income of an employee under section 129. 21
‘‘(4) FIRST CREDIT YEAR.—The term ‘first 22
credit year’ means, with respect to any qualified 23
startup costs— 24
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‘‘(A) the taxable year which includes the 1
date that the dependent care flexible spending 2
plan to which such