Dependent Care FSA vs Credit Calculator
Compare the Dependent Care FSA and the Child and Dependent Care Credit to see which saves more on childcare.
Want to understand the concept, not just the number? Read The Family Tax Credits Guide .
How it's calculated
Childcare is expensive, and there are two tax breaks to help, but you generally have to choose between them. The Child and Dependent Care Credit is a credit worth 20 to 35 percent of your eligible care expenses. The Dependent Care FSA lets you pay for care with pre-tax dollars, saving your income-tax rate plus payroll tax. Which wins depends on your income and how much you spend.
Take the default. Two children in care and 8,000 dollars of expenses. The credit is capped at 6,000 dollars of expenses for two or more dependents, and at a 90,000 dollar income the rate has fallen to its 20 percent floor, so the credit is 1,200 dollars. The FSA lets you set aside up to 7,500 dollars pre-tax, and at a 22 percent bracket plus 7.65 percent FICA that saves about 2,224 dollars. Here the FSA wins clearly, which is common for middle and higher earners, since the credit rate drops to 20 percent above a modest income while the FSA saving rises with your bracket.
The credit tends to win only at low incomes, where its rate is near 35 percent and you may not have access to an FSA. For most working families with an employer FSA, the FSA saves more. You can sometimes combine them, using the FSA first and the credit on any remaining expenses up to the cap, but the interaction is limited. Enter your numbers to see which single option saves you the most.
Assumptions
- The credit is 20 to 35 percent of up to 3,000 dollars of expenses for one dependent or 6,000 for two or more, with the rate falling as income rises. The FSA saves your marginal rate plus 7.65 percent FICA on up to 7,500 dollars.
- You cannot use the same expenses for both, and an FSA reduces the expenses eligible for the credit. This compares each on its own to show the better single choice.
Last updated: 2026-08-08 · Tax year 2026
These assumptions follow our general methodology.
Frequently asked questions
Dependent Care FSA or the tax credit, which is better?
For most middle and higher earners, the FSA saves more, because it saves your full marginal rate plus payroll tax, while the credit rate drops to 20 percent above a modest income. The credit can win at low incomes where its rate is near 35 percent. This calculator compares them.
Can I use both the FSA and the credit?
To a limited extent. You cannot use the same dollar of expenses for both, and money run through an FSA reduces the expenses eligible for the credit. Some families use the FSA up to its limit and claim the credit on remaining expenses, but the overlap is capped.
How much can I put in a Dependent Care FSA?
For 2026 the limit is 7,500 dollars. Contributions are pre-tax, so they avoid both income tax and the 7.65 percent Social Security and Medicare tax, which is what makes the FSA so valuable for those who have access to one.
What expenses qualify?
Care for a child under 13 or a disabled dependent that lets you and your spouse work or look for work. Daycare, preschool, before and after-school care, and day camp qualify. Overnight camp and school tuition for kindergarten and above do not.