FSA Contribution Limits

The IRS restricts the pre-taxable amount an individual can set aside each year in a Flexible Spending Account (FSA). Employers front-load your elected amount at the beginning of the plan year, and that amount is paid back in full via incremental payroll deductions throughout the year.

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Frequently Asked Questions

What is the maximum limit for employee contributions to a health FSA?

• The maximum FSA contribution for plan years starting in 2026 is $3,400.

• The maximum FSA contribution for plan years starting in 2025 is $3,300.

Note: IRS Section 125 limits are adjusted annually for inflation and are typically announced every November.

Is the contribution limit applied to a calendar year or plan year? The limit is strictly applied per plan year, not calendar year.

What if the plan has a short plan year? If the plan operates on a short plan year, the limit must be prorated based on the exact number of months in that short plan year.

What if an employee is hired mid-year? There is no IRS requirement that the limit be prorated for an employee hired mid-year. However, employers retain the right to impose a prorated limit if specified in their plan documents.

What if an employee is employed by multiple employers?

• Controlled / Affiliated Groups: If an employee participates in multiple health FSAs maintained by employers within a controlled group or affiliated service group, their salary reductions are aggregated under a single annual limit.

• Independent Employers: If the employers are entirely unrelated, the employee may independently elect up to the full individual limit under each employer's health FSA.

Can spouses both contribute the maximum health FSA amount? Yes. If spouses work for the same employer (or different employers), both individuals can independently elect and contribute the maximum allowable amount.

Does an account carryover reduce my new contribution limit? No. Health FSA carryovers/rollovers do not count against or otherwise affect your new plan year maximum salary contribution limit.

🔗 To see how remaining funds roll over or expire at the end of your plan year, view our guide on [Understanding Rollovers, Grace Periods, and Run-Out Dates].

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