IRS Releases 2026
Cost-of-Living Adjustments
The IRS has released the 2026 cost-of-living adjustments (COLAs) for a wide variety of tax-related limits, including limits relating to health FSAs, qualified transportation fringe benefits, qualified small employer health reimbursement arrangements (QSEHRAs) and DCAPs.
Health FSAs
For 2026, the dollar limit on employee salary reduction contributions to health FSAs will be $3,400 (up from $3,300). If the cafeteria plan permits health FSA carryovers, the maximum amount that can be carried over to the 2027 plan year is $680 (up from $660).
Qualified Transportation Fringe Benefits
For 2026, the monthly limit on the amount that may be excluded from an employee’s income for qualified parking benefits will be $340 (up from $325). The combined monthly limit for transit passes and vanpooling expenses for 2026 will be $340 (up from $325).
QSEHRAs
For 2026, the maximum amount of payments and reimbursements under a QSEHRA will be $6,450 for self-only coverage and $13,100 for family coverage (up from $6,350 and $12,800, respectively).
DCAPs
For 2026, the maximum amount of DCAP benefits that can be excluded from income is $7,500 or $3,750, depending on marital and filing status (up from $5,000 and $2,500, respectively).
Sponsors and administrators of benefits with limits that are changing should determine whether their plans will automatically apply the latest limits or must be amended (if desired) to recognize the changes. Any changes in limits should also be communicated to employees.
