H.B. 436 Summary

• Establishes a Dependent Care Flexible Spending Account (FSA) allowing eligible employees to use pre-tax dollars (up to $5,000 for joint returns, $2,500 for individual returns) to pay for dependent care expenses.

• Defines qualifying individuals as dependents under age 13 or dependents/spouses who are physically or mentally incapable of self-care, consistent with federal Internal Revenue Code section 129.

• Eligible expenses include child care services, summer school programs, before and after school programs, and adult day care programs that enable the taxpayer to continue working.

• Requires accounts be held in federally-insured depository institutions with funds invested only in savings or time deposits; trustees must verify expenses are eligible and receive reimbursement forms with paid receipts before distributing funds.

• Takes effect July 1, 2021, with provisions applying to taxable years beginning after December 31, 2021; unused funds at year-end escheat to the state per federal IRS rules.