Inflation-Adjusted Limits & Thresholds

The Internal Revenue Service has recently released the annual inflation adjustments for the tax year 2025-26. These adjustments encompass more than 60 tax provisions, including the tax rate schedules and various other tax changes. The following is a comprehensive overview of changes to limits and thresholds on some well-known tax provisions for the upcoming tax year.

Medical Flexible Spending Account (FSA)

Contribution limit

• 2025: $3,300 per year
• 2026: $3,400 per year

Carryover limit

• 2025: $660 per year
• 2026: $680 per year

Commuter Benefits

Monthly contribution limit

• 2025: $325 per month
• 2026: $340 per month

Adoption Assistance

Annual limit

• 2025: $17,280 per year
• 2026: $17,670 per year

The maximum amount that may be excluded from an employee’s gross income for the adoption of a special needs child is $17,670. The adoption credit begins to phase out for taxpayers with modified adjusted gross income (MAGI) above $265,080 and is fully phased out at $305,080.

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

Annual limit

• 2025: $6,350 (Self-only) | $12,800 (Family)
• 2026: $6,450 (Self-only) | $13,100 (Family)

Health Savings Account (HSA)

Annual contribution limit

• 2025: $4,300 (Self-only) | $8,550 (Family)
• 2026: $4,400 (Self-only) | $8,750 (Family)

High-Deductible Health Plan (HDHP)

Self-only coverage

• Minimum deductible: $1,650 (2025) → $1,700 (2026)
• Maximum out-of-pocket: $8,300 (2025) → $8,500 (2026)

Family coverage

• Minimum deductible: $3,300 (2025) → $3,400 (2026)
• Maximum out-of-pocket: $16,600 (2025) → $17,000 (2026)