Section 1 Short title
This Act may be cited as the “Working Parents Tax Relief Act”.
Working Parents Tax Relief Act
A BILL
To amend the Internal Revenue Code of 1986 to increase the amount excludable from gross income for dependent care assistance and dependent care flexible spending arrangements and to provide for a carryover of unused dependent care benefits in dependent care flexible spending arrangements.
Sec. 2 Increase in amount excludable for dependent care assistance and dependent care flexible spending arrangements
In general— Section 129(a)(2)(A) of the Internal Revenue Code of 1986 is amended by striking “$5,000 ($2,500” and inserting “$7,500 (1/2 such amount”.
Inflation adjustment— Section 129(a)(2) of such Code is amended by adding at the end the following new subparagraph:
“(D) Adjustment for inflation—In the case of any taxable year beginning after December 31, 2017, the $7,500 amount in subparagraph (A) shall be increased by an amount equal to—
“(i) such amount, multiplied by
“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins by substituting “calendar year 2016” for “calendar year 1992” in subparagraph (B) thereof.”
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2016.
Sec. 3 Carryover of unused dependent care benefits in cafeteria plans and flexible spending arrangements
In general— Section 125(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(3) Carryover of unused dependent care benefits—Notwithstanding paragraph (2)(A)—
“(A) In general—For purposes of this title, a plan or other arrangement shall not fail to be treated as a cafeteria plan or dependent care flexible spending arrangement solely because qualified benefits under such plan include a dependent care flexible spending arrangement under which unused dependent care benefits may be carried forward to the succeeding plan year of such flexible spending arrangement.
“(B) Dependent care flexible spending arrangement—For purposes of this paragraph, the term dependent care flexible spending arrangement means a flexible spending arrangement (as defined in section 106(c)) that is a qualified benefit and only permits reimbursement for expenses for dependent care assistance.
“(C) Unused health benefits—For purposes of this paragraph, with respect to an employee, the term unused dependent care benefits means the excess of—
“(i) the maximum amount of reimbursement allowable to the employee during a plan year under a dependent care flexible spending arrangement, taking into account any election by the employee, over
“(ii) the actual amount of reimbursement during such year under such arrangement.”
Effective date— The amendments made by this section shall apply to plan years ending after the date of the enactment of this Act.