The Internal Revenue Service (IRS) has announced that the 2026 contribution limit for health flexible spending accounts (FSAs) will be $3,400, an increase of $100 from the 2025 limit.
Health FSAs allow employees to set aside pre-tax dollars from their paychecks to cover qualified medical expenses, such as doctor visits, prescriptions, dental care, and vision care. For plans that allow the carryover of unused FSA funds, the maximum carryover amount will increase to $680, up from $660 for the 2025 limit.
Recent legislation known as the “One Big Beautiful Bill Act” increased the maximum limit for dependent care FSAs for plan years starting on or after January 1, 2026, to be $7,500 per household (previously $5,000) for single taxpayers and married couples filing jointly, or $3,750 (previously $2,500) for married individuals filing separately. Married couples have a combined $7,500 limit (previously $5,000).
Next Steps for Employers
As open enrollment may have begun for calendar-year plans, employers should review and update their open enrollment materials and communications to employees regarding FSAs. Additionally, employers may need to update payroll systems and review their employee handbook policies if they specify annual FSA limits.
