IRS Announces Benefit Limit Adjustments for 2027

The Internal Revenue Service (IRS) released annual inflation adjustments for more than 60 tax provisions in Revenue Procedure 2026-35. Many of these adjustments affect employee benefits.

Health care flexible spending accounts: For tax years beginning in 2027, the dollar limitation for voluntary employee salary reductions for contributions to health flexible spending arrangements increases to $3,500, up $100 from prior year. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $700, an increase of $20 from tax years beginning in 2026.