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Understanding the New 2026 IRS Contribution Limits for FSAs

As the annual benefits open enrollment period approaches, it's essential for consumers to stay informed about the latest changes to flexible spending accounts (FSAs). Recently, the Internal Revenue Service (IRS) announced significant increases to the contribution limits for FSAs, which are vital for managing healthcare expenses for millions of Americans. With this article, we aim to provide you with crucial insights into these developments and tips for making the most of your FSA funds.

What is a Flexible Spending Account (FSA)?

A Flexible Spending Account (FSA) is a tax-advantaged financial account that allows employees to contribute a portion of their earnings to pay for qualified medical expenses. Enrolled through employer-sponsored benefits programs, FSAs offer the opportunity to lower taxable income as contributions are made pre-tax. The IRS defines a wide array of eligible expenses, giving FSA holders flexibility in how they utilize their funds for healthcare needs.

Increased Contribution Limits for 2026

The IRS has announced that the 2026 contribution limit for FSA employee contributions will rise from $3,300 to $3,400. Additionally, the carryover limit—unused FSA funds that may be carried over from year to year—will increase from $660 in 2025 to $680 in 2026. The carryover feature is optional for employers, so it’s advisable to check with your benefits department to confirm its availability.

This increase in limits is crucial for many individuals and families facing rising healthcare costs.

Five Essential Facts About FSAs

1. Per Account Basis:
The new $3,400 limit applies per FSA account, meaning if you change jobs or employers during the year, you can still contribute the full amount at your new employer's FSA, regardless of prior claims.

2. Unified Contribution Limits:
Unlike Health Savings Accounts (HSAs), which have different limits based on individual versus family coverage, the FSA contribution limit is the same for both individuals and families.

3. Combined Contributions:
If both spouses have access to their FSAs, they can each contribute up to $3,400, resulting in a total household contribution of $6,800.

4. Exclusion of Carryover Amount:
The $3,400 limit does not include the carryover from the previous year. Therefore, if your employer allows a carryover of $660 from 2025, you could have a balance of $4,060 in 2026 ($3,400 + $660).

5. Employer Contributions:
FSA contribution limits apply only to employee pre-tax contributions. Employers can contribute additional amounts beyond the employee maximum.

Managing Your FSA Wisely

To make the most of your increased contribution limits, begin by strategizing how to allocate your funds. FSA Store® provides a comprehensive list of eligible products and services, ensuring you don’t miss out on any tax-free spending opportunities throughout the year. The platform also offers personalized searches categorized by health condition, lifestyle, and product type, enhancing your shopping experience.

With healthcare costs continuously rising, utilizing improvements in FSA contribution limits can help you allocate more resources for your healthcare needs. Be proactive about these changes and make informed decisions during open enrollment to maximize your benefits.

For additional information about FSAs and to explore eligible expenses, visit the FSA Learning Center at FSAstore.com. There, you can find valuable resources to guide your flexible spending decisions effectively.

About Health-E Commerce

Health-E Commerce® is the leading name behind FSA Store® and HSA Store®, serving the needs of millions of consumers enrolled in pre-tax health and wellness programs. Additionally, through their Caring Mill™ brand, part of every purchase is directed toward supporting the Children’s Health Fund, reinforcing Health-E Commerce's commitment to health and wellbeing. Since 2010, they have paved the way for direct-to-consumer e-commerce focused exclusively on pre-tax health benefits.