IRS raises FSA, commuter contribution limits for 2026

It’s that time of year again—the Internal Revenue Service (IRS) has announced new contribution limits for Flexible Spending Accounts (FSAs), commuter benefits, and more. The announcement comes just in time for Open Enrollment season, when employers are preparing benefits education programs and helping employees understand their annual contributions. We’ll share all the upcoming changes, along with some tips for how employers can prep for Open Enrollment.

What are the IRS 2026 FSA contribution limits?

The October 9th announcement raised the health FSA contribution limit from $3,300 to $3,400, a $100 boost from the previous year. This adjusted amount is inflation-adjusted and will affect members who use these accounts to pay for qualified medical expenses with pre-tax dollars. These funds can be used for copayments, deductibles, prescriptions, over-the-counter medications, dental and vision expenses, and more. Check out our guide to eligible FSA expenses here.

In addition, the IRS has also announced a change in the maximum carryover amount. Only some plans allow employees to carry over FSA funds from one tax year to the next. For plans that do, the amount will increase by $20 in 2026, from $660 to $680.

Open Enrollment is a key opportunity for employers to communicate these coming changes to their employees so they can plan for upcoming medical expenses, utilize “use it or lose it” funds, and elect the options that are most beneficial to their families.

How did the IRS update commuter benefit contribution limits for 2026?

Additionally, the IRS announced slight increases for 2026 Commuter benefits to reflect changes in the cost of living. Both qualified parking and transit monthly limits will increase to $340, up from $325 in the 2025 tax year.

What are the maximum amounts for adoption assistance in 2026?

This year, adoptive parents will also see an increase in the maximum credit allowed for 2026. It will jump to $17,670, up from $17,280 in 2025. The amount of credit that may be refundable will be $5,120 in 2026. These updates are important for families planning to adopt, as they provide enhanced financial support through exclusions and credits on their tax obligations.

These benefits mean that families can exclude a larger portion of adoption-related expenses from taxable income and also claim a greater tax credit, effectively reducing the overall cost of adoption.

How much can be contributed to a QSEHRA in 2026?

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) limits will also see small boosts in 2026. These accounts provide a flexible solution for smaller businesses and their employees to pay for health coverage. For 2026, the individual coverage limit has increased to $6,450, a $100 increase compared to 2025. For family coverage, the 2026 limit is $13,100, up $300 compared to 2025’s limit.

QSEHRAs allow small employers to reimburse employees tax-free for their health insurance premiums and other qualified medical expenses.

What are the 2026 contribution limits for MSAs?

Medical Savings Accounts (MSAs) offer individuals a tax-advantaged way to save for medical expenses, specifically through high-deductible health plans (HDHPs). For 2026, the minimum and maximum deductible amounts for qualifying HDHP individual coverage are $2,900 and $4,400, respectively, a small increase compared to 2025. MSAs provide flexibility for account holders to cover qualifying medical expenses with pre-tax funds, promoting cost-effective healthcare management strategies.

2026 HSA contribution limits (previously announced)

The IRS announced new contribution limit increases for Health Savings Accounts (HSAs) back in May 2025, but it’s still a good idea for employers to double check the information they are sharing with employees during Open Enrollment. The 2026 limit for individuals is $4,400 (an increase of $100) and $8,750 (an increase of $200). Additionally, High-Deductible Health Plan minimum deductibles are now $1,700 for individuals and $3,400 for families. Out-of-pocket maximums have also increased for 2026, with the individual limit now set at $8,500 and the family maximum now at $17,000.

Best practices for Open Enrollment

The 2026 IRS updated limits provide a great opportunity for employees and their families. It can help them maximize pre-tax savings, save for critical expenses, and make the most of your benefit offerings. Here are three things employers can do to help get the word out:

1. Update your enrollment season materials: Make sure your 2026 benefits booklet, Open Enrollment webinar slides, portal, and all other communication materials reflect these updated contribution limits. Check out our OE Toolkit for help getting started.
2. Provide calculators: Make it easy for employees to calculate their contributions from each paycheck with calculators or links to online tools.
3. Tell them again (and again): Benefits teams are all too aware that people need to hear information more than just once in order to remember it. Make sure there are lots of opportunities for employees to get familiar with the new IRS limits. HealthEquity’s Content Library is a good place for members to start their benefits education.

All these contributions can really add up for employees and their families. Benefits teams can use Open Enrollment as an opportunity to help employees understand their options, maximize their savings, and make strategic decisions for their families.