Federal benefit · Tax credit · Last verified 2026-08-08

Enroll in a Dependent Care FSA

Pay for daycare with pre-tax money — worth roughly $2,000/yr at typical tax rates. A new baby opens a short enrollment window.

What it's worth

Up to $7,500/yr pre-tax

Deadline

Within 2 months of the birth

Who qualifies

Employer must offer the plan. Both parents generally need earned income.

The details

If your employer offers a Dependent Care FSA, you can set aside up to $7,500 a year pre-tax (2026 limit) for daycare, nannies, or preschool. At typical combined tax rates that's around $2,000 a year you keep. A new baby is a qualifying life event, which opens a roughly 30–60 day window to enroll outside open enrollment — ask HR before the window closes. If you missed it, enroll at the next open enrollment.

Ask HR about the QLE window

Official source: https://www.irs.gov/publications/p503