Employers are permitted to increase the maximum amount of dependent care assistance benefits that can be excluded from an employee's income from $5,000 to $10,500 ($5,250 for Married filing separately). The plan must be amended timely in order for the increase to take effect. See IRS-Issues-Guidance-on-Taxability-of-Dependent-Care-Assistance-Programs-for-2021-2022 for additional information. The 2021 Form W-2, Box 10 under Instructions for Employee has been updated to remove the $5,000 limit and now states that any amount above your employer's plan limit is also included in box 1. The 2021 General Instructions for Forms W-2 and W-3 have been updated to remove the $5,000 limit. A What's New item has been added and the Box 10-Dependent care benefits section under Specific Instructions for Form W-2 has been updated. The revised form and instructions are available on IRS.gov. Only the web versions of the 2021 Form W-2 and 2021 General Instructions for Forms W-2 and W-3 have been updated. The printed versions are not being updated and the original version of these products received and/or issued (including any substitute 2021 Forms W-2 meeting the requirements of Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3) may still be used. A statement (Notice 1454, Errata sheet for the Form W-2 and the General Instructions for Forms W-2 and W-3) will be included with any new print orders for the 2021 Form W-2 or 2021 General Instructions for Forms W-2 and W-3, describing the updates to these products. Employers are not required to include this statement (Notice 1454) with the Forms W-2 they give to their employees, but it’s recommended that employers who have elected to increase the excludable amount of dependent care benefits, as provided by section 9632 of ARP and Section C of Notice 2021-26PDF, inform their employees of the increase so employees can properly file their income tax returns.