Employee Benefits
Legal Alert: IRS Adjusts Health Flexible Spending Account and Other Benefit Limits for 2027
The Internal Revenue Service (IRS) recently released Revenue Procedure 2026-35, which increases the health flexible spending account (FSA) salary reduction contribution limit to $3,500 for plan years beginning in 2027, an increase of $100 from 2026. Thus, for health FSAs with a carryover feature, the maximum carryover amount is $700 (20% of the $3,500 salary reduction limit) for plan years beginning in 2027. When carrying over funds from 2026 to 2027, 20% of the $3,400 salary reduction limit for 2026 is $680.
November 10, 2026
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