Can You Use an FSA for Daycare? Limits, Rules, and Reimbursement

Yes, you can use an FSA for daycare, but only a specific type: a Dependent Care Flexible Spending Account (DCFSA). A regular Health Care FSA cannot pay for child care. A DCFSA lets you set aside pre-tax money from your paycheck to pay for daycare, preschool, after-school programs, and similar care that lets you work. For 2026, the contribution ceiling is $7,500 for joint filers and heads of household, and $3,750 for those married filing separately.¹

Which FSA Pays for Daycare

Two accounts share the “FSA” name, and only one covers child care. A Health Care FSA reimburses medical costs like copays and prescriptions. A Dependent Care FSA reimburses the cost of caring for a qualifying dependent so you can work. The two have separate contribution limits and separate eligible expense lists, and money in one account cannot be spent on the other.

A DCFSA is offered through your employer as part of a cafeteria plan under federal tax law.² The amount you elect is withheld from each paycheck before federal income tax, Social Security tax, and Medicare tax are calculated. You then pay your daycare provider out of pocket and submit a claim to be reimbursed from your account.

Who Counts as a Qualifying Dependent

The person receiving the care has to meet the IRS definition of a qualifying individual. Three groups qualify:

A child under age 13 who is your tax dependent and lives with you more than half the year.³
A spouse who is physically or mentally unable to care for themselves and lives with you more than half the year.³
Another dependent or household member who cannot provide self-care, lives with you more than half the year, and qualifies (or would qualify) as your dependent.⁴

If your child turns 13 during the year, eligibility is determined day by day. You can count care costs through the day before the birthday, not after.⁵

Daycare Costs That Qualify

As long as the care lets you (and your spouse, if married) work or look for work, these expenses are generally eligible:

Licensed daycare center fees. If a center cares for more than six children, it must comply with all applicable state and local regulations.³
Preschool and nursery school tuition below the kindergarten level.
Before-school and after-school programs for children under 13.
Summer day camp, including camps focused on a specific activity such as soccer or computers. Overnight camps do not qualify.³
Wages paid to a nanny or babysitter who cares for your child in your home. If the person is your household employee, you may owe Social Security, Medicare, and federal unemployment taxes on those wages.⁵

What Your DCFSA Will Not Cover

A number of common child-related costs are specifically excluded:

Overnight camps of any kind, even if they provide supervised care.³
Tuition for kindergarten and any higher grade level. The IRS treats these as educational expenses, not care.³
Tutoring, music lessons, dance classes, language classes, and similar enrichment activities.⁶
Food, clothing, and entertainment, unless they are bundled into the cost of care and cannot be separated out.³
Payments to someone you claim as a tax dependent, and payments to the child’s other parent when the child is under 13.⁴

The Work Requirement

DCFSA funds only cover care that lets you work or actively look for work. If you are married, both spouses generally need earned income during the year. There are two exceptions.⁵

A spouse who is a full-time student for at least part of five calendar months during the year is treated as having earned income of $250 per month with one qualifying dependent, or $500 per month with two or more. The same deemed-income rule applies to a spouse who cannot provide self-care. Only one spouse can use this exception in any given month.⁵

Your contribution also cannot exceed the lower-earning spouse’s annual income. If one spouse earns $4,000 for the year, the household can only exclude up to $4,000, regardless of the statutory limit.

2026 Contribution Limits

The annual exclusion limit is $7,500 for joint filers and heads of household, and $3,750 per spouse for those married filing separately.¹ These figures were raised from $5,000 and $2,500 by a federal law change effective in 2026.

Because contributions avoid federal income tax, Social Security tax (6.2%), and Medicare tax (1.45%), the savings can be substantial. A joint filer in the 22% federal bracket who contributes the full $7,500 avoids roughly $2,224 in federal and FICA taxes. State income tax savings, where applicable, are on top of that.

The Use-It-or-Lose-It Deadline

A DCFSA does not carry unused funds into the next plan year. Anything left in the account after the plan year deadline is forfeited. This makes your election amount worth some careful math at open enrollment: pick too high, and you leave money behind.

Many employers offer a grace period of up to two and a half months after the plan year ends, during which you can still incur new eligible expenses and pay for them with prior-year funds.⁷ For a plan year ending December 31, that grace period would run through March 15.

Most plans also have a separate run-out period, typically around 90 days, during which you can submit claims for expenses already incurred. Check your plan documents for the exact deadline. Missing the run-out cutoff forfeits any remaining balance.

Coordinating With the Child and Dependent Care Tax Credit

You cannot claim tax benefits twice for the same daycare expense. Any amount excluded through your DCFSA reduces the expense limit you can use when calculating the child and dependent care tax credit on your return.⁵ The credit’s expense limit is $3,000 for one qualifying dependent and $6,000 for two or more.⁸

If you have two qualifying children and exclude $7,500 through your DCFSA, your credit expense limit drops to zero ($6,000 minus $7,500). Contribute $3,000 to the DCFSA instead, and up to $3,000 in expenses remain available for the credit.⁵

For most families in the 22% bracket or higher, the DCFSA produces larger savings because it also eliminates Social Security and Medicare taxes. The child and dependent care credit can reach 50% of expenses for lower-income households, so families with lower adjusted gross income may come out ahead by using the credit instead. Form 2441 walks through the coordination step by step.⁸

Getting Reimbursed

You pay your daycare provider out of pocket and then submit a claim to your plan administrator. The provider information you need is:

Full legal name and physical address.
Taxpayer Identification Number, Employer Identification Number, or Social Security Number. If the provider is a tax-exempt organization, note that instead.
Dates of service and total amount charged.

IRS Form W-10 exists specifically to collect this information, though any equivalent written statement from the provider works.⁹ If a provider refuses to give you their TIN, submit your claim anyway with what you have and attach a written statement describing your efforts to get it.⁸

Your supporting documentation should be an itemized receipt or statement showing the dependent’s name, the type of service, the dates covered, and the amount billed. Credit card slips, canceled checks, and balance-forward statements generally are not enough on their own. Most administrators accept claims through an online portal and pay verified claims by direct deposit within a few business days.

1
Office of the Law Revision Counsel. 26 U.S. Code 129 – Dependent Care Assistance Programs
2
Office of the Law Revision Counsel. 26 U.S.C. 125 – Cafeteria Plans
3
Internal Revenue Service. Instructions for Form 2441 (2025)
4
Internal Revenue Service. Child and Dependent Care Credit Information
5
Internal Revenue Service. Publication 503 (2025), Child and Dependent Care Expenses
6
FSAFEDS. Eligible Dependent Care FSA (DCFSA) Expenses
7
Internal Revenue Service. Eligible Employees Can Use Tax-Free Dollars for Medical Expenses
8
Internal Revenue Service. 2025 Instructions for Form 2441 – Child and Dependent Care Expenses
9
Internal Revenue Service. About Form W-10, Dependent Care Provider’s Identification and Certification