After outcry, revised GOP tax plan restores flex spending accounts for child care

Flexible spending accounts that allow parents to use pre-tax money to pay for child care are back in the GOP tax plan, thanks to a change endorsed Monday by the chairman of the House’s tax-writing Ways and Means Committee.

The initial draft of the House GOP’s tax bill eliminated the popular accounts, which allow parents to save up to $5,000 pre-tax in flex spending accounts that employers offer.

A new version of the bill released late Monday reversed the repeal of the accounts and extended them for five years. It also preserved the existing child care tax credit.

The changes are likely to survive because they’re included in a plan introduced by committee chairman Kevin Brady, a Texas Republican. The GOP-dominated committee spent Monday afternoon reviewing the legislation, which details the first major overhaul of the U.S. tax code since 1986. The panel plans to continue discussing the bill, and voting on potential changes, throughout the week.

Rep. Lynn Jenkins, a Kansas Republican and Ways and Means member who had fought for the flex accounts, was pleased. “This is critical to working families,” she tweeted after it was restored in the bill. “Proud our communities were able to preserve this tax relief in our bill.”

The child care provisions are expected to provide important political help to a handful of vulnerable Ways and Means members. Rep. Kevin Yoder, a Kansas Republican who faces a tough re-election battle, had been pushing to save and expand the accounts.

“Working families get another big win with the preservation of child care flex spending accounts in this bill today,” Yoder said. “Along with the host of other important reforms – like doubling the standard deduction, creating a new Family Credit, reducing rates and more.”

Joining him in lobbying House leadership over the weekend to save the accounts were Republican Rep. Kristi Noem of South Dakota, who is seeking her state’s governorship, and Missouri Republican Rep. Jason Smith.

“This is for families who can barely make ends meet,” Noem said Monday.

Yoder is among those proposing to increase the amount of money parents can stash in flex spending accounts by $2,500 in a separate bill co-sponsored with Democratic Rep. Stephanie Murphy of Florida — the Promoting Affordable Childcare for Everyone Act, or PACE Act. The latest version of the GOP’s tax plan doesn’t go that far, but it keeps the accounts from being eliminated.

“Keeping the FSAs is going to give families struggling with child care costs the security they need to chase their dreams,” Yoder said. “Moms will be able to get back into the workforce or start the small business they’ve always wanted to, and that’s why we fought so hard to preserve them in the final bill.”

Yoder and Murphy also have been pressing Republican leaders and the White House to boost a different tax credit to ease child care costs, the child and dependent care credit.

With this credit, taxpayers can claim expenses of between $3,000 and $6,000 to provide child care. It aims to make it easier for parents or guardians to work or look for work.

Yoder and Murphy’s bill would have made the credits refundable, meaning they would benefit low-income families, whose incomes keep them from taking advantage of the credit under current law.

Yoder hasn’t gotten the increase he wanted, but the credit survives in its current form in the latest version of the GOP tax bill.

This story was originally published November 6, 2017 at 5:44 PM with the headline "After outcry, revised GOP tax plan restores flex spending accounts for child care."