Under Pennsylvania HB 1300, Pennsylvania changed its tax code to treat contributions to a Dependent Care Assistance Plan (DCAP) up to $5,000 as being excluded by PA local Earned Income Taxes (EIT) and state income tax. The modification is found in Internal Revenue Code Section 129.
The bill retroactively modified the treatment of DCAP contributions in relation to state income tax to January 1, 2023. Additional guidance is available.
Employer Information: Dependent Care Plan (Section 129)
Employee Information: Dependent Care Plan (Section 129)
The state also released further guidance on its official website.
This article is informational and does not constitute legal or financial advice. Consult with an employment lawyer or accountant for additional clarification on how these changes impact your company.
