IRS Announces 2023 Health FSA & Transportation Plan Limits
Health & Dependent Care Flexible Spending Accounts
The pre-tax salary reduction limit for Health Care FSAs will increase to $3,050 for plan years on or after January 1, 2023.
The Health Care FSA pre-tax salary reduction limit is per employee, per employer, per plan year. If the employer contributes to the Health Care FSA, the employer’s contribution is in addition to the amount that the employee can elect to set aside through pre-tax salary reductions. As a result, the employee could have more than $3,050 available per plan year to reimburse qualified medical expenses if the employer contribution is part of the plan design.
If an employer has adopted the option of up to $610 rollover for the Health Care FSA, any amount that rolls over into the new plan year does not affect the maximum election the employee can make.
Please note that Dependent Care (DCA) limits have not changed and remain at a maximum of $5,000 for 2023.
Parking and Transit Limits
Parking and Transportation limits for 2023 each have increased to $300 per month.
*To view the full update to the 2023 tax provisions please refer to Revenue Procedure 2022-38.