HB 436 Summary

• Establishes a Dependent Care Flexible Spending Account (FSA) for all working taxpayers in Hawaii to use pre-tax dollars for eligible dependent care expenses.

• Allows deductions up to $5,000 per year for joint returns and $2,500 for individual/separate returns paid into qualifying dependent care FSAs.

• Defines eligible dependent care expenses as services including child care, summer school programs, before and after school programs, and adult day care for qualifying individuals (dependents under 13 or dependents/spouses unable to care for themselves).

• Requires FSA trustees to be federally insured financial institutions, maintain individual records, and distribute funds only upon receipt of completed reimbursement forms and proof of eligible expenses.

• Takes effect July 1, 2021, with the definition of "qualifying individual" and FSA provisions applying to taxable years beginning after December 31, 2021.