Judy Kamens Compliance Specialist View Bio

Click here to download this document: 2025 FSA Limit

Health FSA Limit Increases for 2025

HIGHLIGHTS

  • The health FSA dollar limit increases to $3,300 for plan years beginning in 2025.
  • Employers may impose their own dollar limit on employee salary reduction contributions to health FSAs, up to the ACA’s maximum.
  • Employers should communicate their 2025 limit to employees as part of the open enrollment process.
  • The limit on health FSA carryovers increases to $660 for plan years beginning in 2025.

On Oct. 22, 2024, the IRS released Revenue Procedure 2024-40 (Rev. Proc. 24- 40), which includes the inflation-adjusted limit for 2025 on employee salary reduction contributions to health flexible spending accounts (FSAs). For plan years beginning in 2025, the adjusted dollar limit on employees’ pre-tax contributions to health FSAs increases to $3,300. This is a $100 increase from the 2024 health FSA limit of $3,200.

The Affordable Care Act (ACA) imposes a dollar limit on employees’ salary reduction contributions to health FSAs. This limit started at $2,500 for plan years beginning on or after Jan. 1, 2013, and has been adjusted for inflation for subsequent plan years. Employers should ensure their health FSAs will not allow employees to make pre-tax contributions over $3,300 for the 2025 plan year. Employers can impose a lower limit on employees’ pre-tax contributions to a health FSA.

Employers should confirm their health FSA contribution limit is included in the plan’s documents and communicate it to employees at enrollment time.

 

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