Many employee benefits are subject to annual dollar limits that are adjusted for inflation by the IRS each year. The following commonly offered employee benefits are subject to these limits:
- High deductible health plans (HDHPs) and health savings accounts (HSAs);
- Health flexible spending accounts (FSAs);
- 401(k) plans; and
- Transportation fringe benefit plans.
The IRS typically announces the dollar limits that will apply for the next calendar year before the beginning of that year. This gives employers time to update their plan designs and make sure their plan administration is consistent with the new limits.
This Compliance Overview includes a chart of key employee benefits limits for 2026. It also includes the 2025 limits for comparison purposes. Most of these limits increase for 2026. Although the contribution limit for dependent care FSAs is not indexed for inflation, the One Big Beautiful Bill Act increased the limit, effective for 2026.
Inflation-Adjusted Limits
- HSA contributions
- HDHP cost-sharing limits
- Health FSA pre-tax contributions
- Health FSA carryovers
- Monthly limits for transportation fringe benefit plans
- Employees’ elective deferrals to 401(k) plans, both pre-tax and Roth
- Tax exclusion for adoption assistance benefits
Dependent Care FSA Limit
- Effective for taxable years beginning after 2025, the annual contribution limit for dependent care FSAs increases to $7,500 (or $3,750 for married individuals filing separate tax returns).
- This limit is not indexed for inflation so it will stay the same going forward, unless it is adjusted by future legislation.
LINKS & RESOURCES
- IRS Revenue Procedure 2025-19: 2026 limits for HSAs and HDHPs
- IRS Notice 2025-67: 2026 limits for retirement plans
- IRS Revenue Procedure 2025-32: 2026 limits for health FSAs, adoption assistance and transportation fringe benefits
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. © 2025 Zywave, Inc. All rights reserved.
