IRS Sets 2027 Health FSA Limit at $3,500
The Internal Revenue Service announced higher 2027 limits for health flexible spending accounts, health savings accounts and related benefits.
Updated on Nov. 6, 2026 in Retirement Planning
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The IRS set the 2027 health flexible spending account contribution limit at $3,500, up from $3,400 in 2026, and raised the carryover limit to $700 from $680. Health savings account limits and commuter benefit limits also rose for 2027.
Why it matters
The adjustments are tied to inflation and change how much workers can shelter from taxes on health and commuting costs next year. Employers may respond by promoting these accounts and encouraging higher worker contributions.
The IRS data sets the 2027 health FSA contribution limit at $3,500 and the carryover limit at $700, both higher than 2026 levels of $3,400 and $680. Figures are inflation adjustments; the extraction does not show how many workers use these accounts.
The players
Internal Revenue Service
The IRS is the federal agency responsible for administering and enforcing the U.S. tax code, including annual inflation adjustments to tax-advantaged accounts.
The details
Health FSA balances are generally forfeited at year end unless an employer offers a grace period or limited carryover. The 2027 monthly pretax commuter benefit limit for parking and transit rises to $350 from $340, and the maximum adoption assistance amount rises to $18,250 from $17,670. The refundable portion of the adoption credit is $5,280.
Timeline
May 2026: IRS announced 2027 HSA and high-deductible health plan figures.
Nov. 5, 2026: IRS announced 2027 health FSA and related limits.
Jan. 1, 2027: Commuter benefit limit changes take effect.
Season Trajectory
The 2027 HSA increases continue the yearly inflation-indexing pattern that Section 223 of the Internal Revenue Code requires for health savings accounts. The percentage increases of 2.3% for self-only coverage and 2.9% for family coverage follow that same indexing formula.
Workers with health FSAs can contribute up to $3,500 in 2027 and carry over up to $700 if their employer allows it. Health FSA balances not used or carried over are generally forfeited at year end.
The takeaway
Workers should check whether their employer offers a grace period or carryover for health FSA balances before the end of the plan year. Planning contributions to match the new limits can reduce taxable income in 2027.
Further reading
For related coverage, see Retirement Planning in the personal finance section.
Source note: This article includes information reported by Shrm.
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