Increase in exclusion for employer-provided dependent care assistance

(a) In general Subparagraph (A) of section 129(a)(2) of the Internal Revenue Code of 1986 (relating to dependent care assistance programs) is amended by striking $5,000 ($2,500 and inserting $7,500 (half such dollar amount. (b) Inflation adjustment Paragraph (2) of section 129(a) of such Code is amended by striking subparagraph (D) and inserting the following new subparagraph: (D) Inflation adjustment In the case of any taxable year beginning in a calendar year after 2026, the $7,500 amount in subparagraph (A) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof. Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $100.. (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.