IRS Releases Many Benefit Limits for 2026
| Today, October 9th, the Internal Revenue Service announced in Revenue Procedure 2025-32 the annual inflation adjustments for more than 60 tax provisions for 2026, including the tax rate schedules, and other tax changes. This Revenue Procedure provides details about these annual adjustments: – The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) is increased to $3,400. – If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is increased to $680. – The amount for the adoption credit or the amount excluded for adoption assistance allowed for an adoption of a child with special needs is increased to $17,670. – The dollar amount for employee health Insurance expense of small employers is increased to $34,100. This used for the tax credit. – The monthly limitation for qualified transportation fringe benefit regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is increased to $340. The monthly limit for qualified parking is also $340. – The limitations regarding eligible long-term care premiums includible in the term “medical care,” are decreased follows: |
| Attained Age Before the Close of the Taxable Year Limitation on Premiums |
| 40 or less More than 40 but not more than 50 More than 50 but not more than 60 More than 60 but not more than 70 More than 70 | $500 $930 $1,860 $4,960 $6,200 |
| The deductible and out-of-pocket limits for “high deductible health plans” for Medical Savings Accounts are as follows: |
| – For self-only coverage, a health plan that has an annual deductible that is not less than $2,900 and not more than $4,400, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $5,850. – For family coverage, a health plan that has an annual deductible that is not less than $5,850 and not more than $8,750, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $10,700. |
| The dollar total amount of payments and reimbursements for any year under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) can not exceed $6,450 ($13,100 for family coverage). |
| For a copy of Revenue Ruling 2025-32, please click on the link below: https://benefitslink.com/m/url.cgi?n=14885143&p=1760027051 |