IRS issues 2025 adjusted limits for various benefits
Posted by DaveMoll on Oct. 24, 2024 / Subscribe 0
In Rev. Proc. 2024-40, the IRS provides a variety of inflation-adjusted figures for 2025, including figures for cafeteria plans, long-term care, medical savings accounts (MSAs), and transportation fringe benefits.
Cafeteria plans. For the taxable year beginning in 2025, the dollar limitation under Code Sec. 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements increases to $3,300. If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is $660.
Long-term care. For taxable years beginning in 2025, the limits under Code Sec. 213(d)(10) for eligible long-term care premiums deductible as “medical care,” based on the insured’s age before the close of the taxable year, are as follows:
- for those age 40 or younger, the limit is $480;
- for those older than age 40 but not older than age 50, the limit is $900;
- for those older than age 50 but not older than age 60, the limit is $1,800;
- for those older than age 60 but not older than age 70, the limit is $4,810; and
- for those older than age 70, the limit is $6,020.
In addition, for calendar year 2025, the per-day limit applicable to aggregate payments for per diem-type long-term care insurance contracts and amounts received by a chronically ill individual under a life insurance contract under Code Sec. 7702B(d)(4) is $420.
MSAs. For self-only coverage in 2025, a high-deductible health plan (HDHP) is defined in Code Sec. 220(c)(2)(A) as a plan that has an annual deductible that is not less than $2,850 and not more than $4,300 ($2,800 and $4,150 in 2024) and annual out-of-pocket expenses that do not exceed $5,700 (up from $5,550 in 2024). For family coverage in 2025, an HDHP has an annual deductible that is not less than $5,700 and not more than $8,550 (up from $5,550 and $8,350 in 2024) and annual out-of-pocket expenses that do not exceed $10,500 (up from $10,200 in 2024).
Transportation. For the taxable year beginning in 2025, the monthly limitation under Code Sec. 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, increases to $325. The monthly limitation under Code Sec. 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, also increases to $325.
QSEHRA. For tax years beginning in 2025, in order to qualify as a small employer health reimbursement arrangement (QSEHRA) under Code Sec. 9831(d), the total amount of payments and reimbursements for any year cannot exceed $6,350 (up from $6,150 in 2024) ($12,800 for family coverage, up from $12,450 in 2024).
SOURCE: Rev. Proc. 2024-40, I.R.B. 2024-45, November 4, 2024.
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