IRS Releases Adjusted Contribution Limits for FSAs and Commuter Accounts
On October 9th, the IRS released the 2026 maximum contribution limits for Flexible Spending Arrangements (FSA) and commuter accounts. Rev. Proc. 2025-32 provides the inflation-adjusted items for 2026 for various code provisions.
For taxable years beginning in 2026, the annual contribution limit for health FSAs has increased from $3,300 in 2025 to $3,400. Additionally, the maximum carryover amount has also increased from $660 in 2025 to $680. The permissibility of carrying over unused FSA funds is dependent on the language of the cafeteria plan.
The maximum contribution amount for dependent care assistance plans increased from $5,000 in 2025 to $7,500. Employers increasing the amount employees can contribute to their dependent care assistance plan should be mindful of the nondiscrimination testing implications under IRC Section 129.
Finally, for taxable years beginning in 2026, the monthly limitation for transportation fringe benefits (e.g., commuter highway vehicle, transit pass, and qualified parking) increased from $325 in 2025 to $340.
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