2025 Health FSA Inflation Adjustments Released
The IRS has issued Revenue Procedure 2024-40, detailing inflation-adjusted 2025 limits for health FSAs, QSEHRAs, adoption assistance and transportation benefits.
Published: 10.25.2024
The Internal Revenue Service recently issued Revenue Procedure 2024-40, which establishes various 2025 tax-related limits that have been adjusted for inflation. The table below identifies updates to the 2025 health and fringe benefit plans addressed in this notice. The health flexible spending account (health FSA) employee contribution limit, carryover limit, and maximum qualified small employer health reimbursement arrangement (QSEHRA) employer contribution are annual amounts that apply once a plan starts/renews in 2025.1 The adoption assistance program limit is an annual maximum that applies for the 2025 calendar year, while the transportation benefit is a monthly threshold that also applies for the 2025 calendar year.| Benefit | 2024 | 2025 |
|---|---|---|
| Maximum Employee Contribution to a Health FSA | $3,200 | $3,300 |
| Health FSA Carryover Limit | $640 | $660 |
| Adoption Assistance Program | $16,810 | $17,280 |
| Maximum Annual Employer Contribution to a QSEHRA | $6,150 (self-only coverage) $12,450 (family coverage) |
$6,350 (self-only coverage) $12,800 (family coverage) |
| Maximum Monthly Benefit for Qualified Transit Passes, Van Pool Services, and Qualified Parking | $315 | $325 |
1 Employers with non-calendar year QSEHRAs are permitted to either establish a prorated maximum employer contribution using the two calendar-year limits their plan bridges or adopt the calendar year limit in place at the time their plan renews. Practically speaking, however, many employers will not have enough advance access to the following year’s limit to calculate a prorated limit, and will instead adopt the limit in place when the plan renews for the entirety of that plan year.
Source: MZQ Consulting
