Growing Family Benefits
- Don't get pregnant without us!
- Enjoy security for your family
- Ask for employee paid options at work
Determine Your Child Care Deduction Choice
Your Federal Income Tax Bracket and your Adjusted Gross Income (AGI) factor into which provides the greatest level of tax savings: the Dependent Care FSA, or the Child Care Tax Credit.
The Child Tax Credit applies a progressive percentage against your eligible amount of child care expenses. The percentage levels off at 20% for AGI above $43,000.
- Example: one child, AGI above $43,000.
- $3,000 X 20% = $600
Flexible Spending Account tax savings are determined by your marginal Federal Income Tax Bracket. The marginal rates are currently: 10%, 15%, 25%, 28%, 33%, or 35%.
There are wide varations. Most families in higher tax brackets will see greater savings from an FSA.
- Example: one child, tax bracket is 25%.
- $5,000 X 25% = $1,250
Child Care Tax Credit (AGI) Table
| AGI | Percent | AGI | Percent | AGI | Percent |
| < $15K | 35% | < $27K | 29% | < $37K | 24% |
| < $17K | 34% | < $29K | 28% | < $39K | 23% |
| < $19K | 33% | < $31K | 27% | < $41K | 22% |
| < $21K | 32% | < $33K | 26% | < $43K | 21% |
| < $23K | 31% | < $35K | 25% | > $43K | 20% |
| < $25K | 30% |
Adjusted Gross Income (AGI) is defined in the IRS Federal Tax Code. It represents your total income, before deductions are applied.
Federal Income Tax Tables
Your FSA savings can be estimated by looking at your likely marginal federal income tax rate. An FSA lowers your taxable income, so you want to look at your tax bracket for your last $5,000 of income. Your income tax rate is determined by your taxable income, and filing status.
