IRS Releases Many Benefit Limits for 2027
November 6, 2026
Yesterday, the Internal Revenue Service announced in Revenue Procedure 2026-35 the annual inflation adjustments for more than 60 tax provisions for 2027, including the tax rate schedules, and other tax changes. This Revenue Procedure provides details about these annual adjustments:
There are several benefit limitations for 2027 included:
-The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) is increased to $3,500.
-If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is increased to $700.
-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 $18,250.
-The standard tax-free limit for employer-provided educational assistance (which covers tuition, fees, books, supplies, equipment, and qualified student loan repayments combined) is $5,400.
-The dollar amount for employee health Insurance expense of small employers is increased to $35,162.04. 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 $350. The monthly limit for qualified parking is also $350.
-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 | $500 |
| More than 40 but not more than 50 | $945 |
| More than 50 but not more than 60 | $1,890 |
| More than 60 but not more than 70 | $5,030 |
| More than 70 | $6,290 |
-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 $3,000 and not more than $4,550, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $6,050.
- For family coverage, a health plan that has an annual deductible that is not less than $6,050 and not more than $9,050, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $11,050.
-The dollar total amount of payments and reimbursements for any year under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) can not exceed $6,700 ($13,550 for family coverage).
For a copy of Revenue Ruling 2026-35, please click on the link below: