H.R. 7922

119 HR 7922 IH: Small Business Dependent Care FSA Opportunity Act
 U.S. House of Representatives
 2026-03-12
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 I  119th CONGRESS  2d Session  H. R. 7922  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.
1.
Short title
This Act may be cited as the   Small Business Dependent Care FSA Opportunity Act  .
2.
Small employer dependent care flexible spending plan startup costs
(a)
In general
Subpart D of part IV of subchapter A of  chapter 1  of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
45BB.
Small employer dependent care flexible spending plan startup costs
(a)
In general
For purposes of section 38, in the case of an eligible employer, the small employer dependent care flexible spending plan startup cost credit determined under this section for any taxable year is an amount equal to the qualified startup costs paid or incurred by the taxpayer during the taxable year.
(b)
Dollar limitation
The amount of the credit determined under this section for any taxable year shall not exceed—
(1)
for the first credit year and each of the 2 taxable years immediately following the first credit year, the greater of—
(A)
$500, or
(B)
the lesser of—
(i)
$250 for each employee of the eligible employer who is not a highly compensated employee (as defined in section 414(q)) and who is eligible to participate in the dependent care flexible spending plan maintained by the eligible employer, or
(ii)
$5,000, and
(2)
zero for any other taxable year.
(c)
Eligible employer
For purposes of this section—
(1)
In general
The term  eligible employer  has the meaning given such term by section 408(p)(2)(C)(i).
(2)
Requirement for new dependent care flexible spending plans
Such term shall not include an employer if, during the 3-taxable year period immediately preceding the 1st taxable year for which the credit under this section is otherwise allowable for a dependent care flexible spending plan of the employer, the employer or any member of any controlled group including the employer (or any predecessor of either) established or maintained a dependent care flexible spending plan for substantially the same employees as the employees for whom the dependent care flexible spending plan with respect to which such credit is otherwise allowable is established or maintained.
(d)
Other definitions
For purposes of this section—
(1)
In general
The term  qualified startup costs  means any ordinary and necessary expenses of an eligible employer which are paid or incurred in connection with—
(A)
the establishment or administration of a dependent care flexible spending plan, or
(B)
education of employees with respect to such plan.
(2)
Plan must have at least 1 participant
Such term shall not include any expense in connection with a plan that does not have at least 1 employee eligible to participate who is not a highly compensated employee (as defined in section 414(q)).
(3)
Dependent care flexible spending plan
The term  dependent care flexible spending plan  means so much of any plan of an employer as consists of dependent care flexible spending arrangements. For purposes of the preceding sentence, an arrangement shall be treated as a dependent care flexible spending arrangement only if employer contributions to such arrangement are excludible from the gross income of an employee under section 129.
(4)
First credit year
The term  first credit year  means, with respect to any qualified startup costs—
(A)
the taxable year which includes the date that the dependent care flexible spending plan to which such costs relate becomes effective, or
(B)
at the election of the eligible employer, the taxable year preceding the taxable year referred to in subparagraph (A).
(e)
Special rules
Rules similar to the rules of section 45E(e) shall apply for purposes of this section.
 .
(b)
Credit To be part of general business credit
Section 38(b) of such Code is amended by striking  plus  at the end of paragraph (40), by striking the period at the end of paragraph (41) and inserting  , plus , and by adding at the end the following new paragraph:
(42)
in the case of an eligible employer (as defined in section 45BB(c)), the small employer dependent care flexible spending plan startup cost credit determined under section 45BB.
 .
(c)
Clerical amendment
The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:
Sec. 45BB. Small employer dependent care flexible spending plan startup costs.
  .
(d)
Effective date
The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.