IRS issues 2026 adjusted limits for various benefits
Posted by DaveMoll on Oct. 14, 2025 / Subscribe 0
In Rev. Proc. 2025-32, the IRS provides a variety of inflation-adjusted figures for 2026, including figures for cafeteria plans, medical savings accounts (MSAs), transportation fringe benefits, and adoption assistance.
Cafeteria plans. For taxable years beginning in 2026, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements rises to $3,400, increasing from $3,300 in tax year 2025. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount rises to $680, increasing from $660 in tax year 2025.
Qualified transportation fringe benefit. For tax year 2026, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking rises to $340, increasing from $325 in tax year 2025.
QSEHRA. For taxable years beginning in 2026, to qualify as a qualified small employer health reimbursement arrangement, the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $6,450 ($13,100 for family coverage).
Medical savings accounts. For tax year 2026, for participants who have self-only coverage, the plan must have an annual deductible that is not less than $2,900 (a $50 increase from the previous tax year), but not more than $4,400 (an increase of $100 from the previous tax year). The maximum out-of-pocket expense amount rises to $5,850, increasing from $5,700 in tax year 2025.
For family coverage in tax year 2026, the annual deductible is not less than $5,850, increasing from $5,700 in tax year 2025; however, the deductible cannot be more than $8,750, an increase of $200 versus the limit for tax year 2025. For family coverage, the out-of-pocket expense limit is $10,700 for tax year 2026, rising from $10,500 in tax year 2025.
Adoption assistance. For tax year 2026, the maximum credit allowed for an adoption of a child with special needs is the amount of qualified adoption expenses up to $17,670, increased from $17,280 for tax year 2025. The excludable amount begins to phase out at $265,080 and is completely phased out at $305,080.
Employer-provided childcare tax credit. For tax year 2026, the One Big Beautiful Bill Act significantly enhances an important credit for employers; it increases the maximum amount of employer-provided childcare tax credit from $150,000 to $500,000 ($600,000 if the employer is an eligible small business).
SOURCE: IRS Rev. Proc. 2025-32, IR-2025-102, Oct. 9, 2025
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