SC Nebraska News

Reps. Adrian Smith (R-NE), Danny K. Davis (D-IL), and Randy Feenstra (R-IA) have come together to introduce the bipartisan Small Business Dependent Care FSA Opportunity Act, aimed at providing tax relief for families and small businesses. The legislation focuses on creating a new tax credit for small businesses with up to 100 employees to assist with the start-up costs of offering Dependent Care Flexible Spending Accounts (DCFSA) as an employee benefit.

In response to the introduction of the bill, Rep. Smith emphasized the importance of supporting American households facing challenges due to record inflation. He stated, “Empowering small businesses to expand their offering of competitive benefits to employees with dependents can help small employers attract new talent while also helping workers as they face the challenges of parenthood. This is a win-win supporting both hardworking families and small business growth.”

Rep. Davis highlighted the significance of the tax code in aiding families grappling with the high costs of childcare. He expressed his satisfaction in working with colleagues to assist employees of small businesses in accessing dependent care flexible spending accounts, stating, “This change will work together with essential child care grants and child care tax credits to give a tax break to families to help them thrive.”

Echoing similar sentiments, Rep. Feenstra shared his experiences from the 36 County Tour, where concerns about the rising cost of childcare were prominent. He emphasized the need for legislation that makes it easier for small businesses to support their employees in covering childcare expenses. Rep. Feenstra stated, “It can be harder for small businesses – which employ the vast majority of Americans – to offer the same types of benefits as larger companies, but with smart policies like this, we can level the playing field and lower childcare expenses for our families.”

The bill draws inspiration from a successful credit designed to address start-up costs for small business owners offering retirement plans. It aims to bridge the access gap to DCFSAs for employees of small businesses, as highlighted by statistics showing that only 27 percent of employees in small businesses with fewer than 100 employees have access to a DCFSA, compared to 61 percent in larger businesses. DCFSAs allow contributions up to $5,000 per year, pre-tax, to help cover childcare costs for dependent children or caregivers.

The bipartisan effort led by Reps. Smith, Davis, and Feenstra underscores a commitment to supporting families and small businesses through targeted tax relief initiatives.