I 
115TH CONGRESS 
2D SESSION 
H. R. 7057 
To amend the Internal Revenue Code to increase the exclusion for employer- 
provided dependent care assistance and to allow limited annual 
carryforward of unused dependent care flexible spending arrangement 
account balances. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 9, 2018 
Mrs. WAGNER (for herself and Mr. SESSIONS) introduced the following bill; 
which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code to increase the exclu-
sion for employer-provided dependent care assistance and 
to allow limited annual carryforward of unused depend-
ent care flexible spending arrangement account balances. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Child and Dependent 
Care Modernization Act of 2018’’. 
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SEC. 2. INCREASE IN EXCLUSION FOR EMPLOYER-PRO-
VIDED DEPENDENT CARE ASSISTANCE. 
(a) IN GENERAL.—Section 129(a)(2) of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking ‘‘shall not exceed’’ in subpara-
graph (A) and all that follows and inserting the fol-
lowing: ‘‘shall not exceed— 
‘‘(i) $8,000 (half such dollar amount 
in the case of a separate return by a mar-
ried individual) if there is 1 qualifying in-
dividual with respect to the taxpayer dur-
ing such taxable year, or 
‘‘(ii) $16,000 (half such dollar amount 
in the case of such a separate return) if 
there are 2 or more qualifying individuals 
with respect to the taxpayer during such 
taxable year.’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(D) QUALIFYING INDIVIDUAL.—For pur-
poses of this paragraph, the term ‘qualifying in-
dividual’ has the meaning given to such term 
under section 21(b)(1).’’. 
(b) INFLATION ADJUSTMENT.—Section 129(a)(2) of 
such Code is amended by redesignating subparagraph (C) 
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as subparagraph (D) and by inserting after subparagraph 
(B) the following new subparagraph: 
‘‘(C) INFLATION
ADJUSTMENT.—In the 
case of any taxable year beginning in a calendar 
year after 2019, the dollar amounts in clauses 
(i) and (ii) of subparagraph (A) shall be in-
creased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2018’ for ‘calendar year 1992’ in sub-
paragraph (A)(ii) thereof. 
Any increase determined under the preceding 
sentence shall be rounded to the nearest mul-
tiple of $100.’’. 
(c) CONFORMING AMENDMENT.—Section 129(a)(2). 
(d) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2018. 
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SEC. 3. CARRYFORWARD AND LIMITATION FOR DEPEND-
ENT CARE FLEXIBLE SPENDING ARRANGE-
MENT ACCOUNT BALANCE. 
(a) IN GENERAL.—Section 125 of the Internal Rev-
enue Code of 1986 is amended by redesignating sub-
sections (k) and (l) as subsections (l) and (m), respectively 
and by inserting after subsection (j) the following new sub-
section: 
‘‘(k) RULES
FOR DEPENDENT CARE FLEXIBLE 
SPENDING ARRANGEMENTS.— 
‘‘(1) CARRYFORWARD OF UNUSED DEPENDENT 
CARE BENEFITS.—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 merely because such arrangement pro-
vides that an amount not exceeding the lesser of— 
‘‘(A) such arrangement’s account balance 
determined as of the end of any plan year, or 
‘‘(B) the limitation described in paragraph 
(2) for the succeeding plan year, 
may be carried forward to the succeeding plan year 
of such flexible spending arrangement. 
‘‘(2) CUMULATIVE LIMITATION.—For purposes 
of this section, if a benefit is provided under a cafe-
teria plan through a dependent care flexible spend-
ing arrangement, such benefit shall not be treated as 
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a qualified benefit unless it provides that the ac-
count balance of the employee shall not exceed the 
dollar limitation in effect with respect to the em-
ployee under section 129(a)(2)(A) for such plan 
year.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2018. 
Æ 
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