HI HB2216

Establishes a Dependent Care Flexible Spending Account (FSA) for Hawaii residents allowing pre-tax deductions up to $5,000 annually ($2,500 for married filing separately) for eligible dependent care expenses.

Permits eligible employees to use pre-tax compensation to pay for care of qualifying individuals, including dependents under 13 years old or dependents/spouses unable to care for themselves, enabling the taxpayer to continue working.

Covers eligible dependent care expenses including child care services, summer school programs, before and after school programs, and adult day care programs.

Requires FSA funds to be held in trust at federally insured financial institutions (banks, credit unions, savings and loans) with distributions requiring completed reimbursement forms and paid receipts for verification of eligible expenses.

Takes effect July 1, 2022; applies to taxable years beginning after December 31, 2022; unused funds at year-end escheat to the state per IRS regulations.