Credit for FSA Plans Proposed in House

Representative Adrian Smith (R-NE) has introduced H.R. 7407, the Small Business Dependent Care FSA Opportunity Act. The bill would provide a credit to certain small employers for startup costs of dependent care flexible spending plans. The credit is equal to the greater of $500, or the lesser of $250 for each eligible non-highly compensated employee or $5,000.

Small employers that had no more than 100 employees who received $5,000 of compensation from the employer in the preceding year would be eligible. The credit is available for a three-year period, with the first year being the taxable year that includes the date that the dependent care flexible spending plan to which such startup costs relate becomes effective.