The IRS will be updating the 2021 Form W-2 instructions to reflect changes that were made in the American Rescue Plan Act. That law increased the maximum amount of dependent care benefits that can be excluded from an employee’s income from $5,000 to $10,500 for most taxpayers. The IRS will update the 2021 Form W-2 instructions by removing the $5,000 limit from the “Instructions for Employees” section. This section will also be updated to state that any amount above the employer’s plan limit is also included in Box 1 of Form W-2. In addition, the specific instructions for the 2021 W-2 Box 10, will be updated to remove the $5,000 limit and remind employers of the increased exclusion amount.