The Internal Revenue Service (IRS) has announced a notable update for employees utilizing health flexible spending accounts (FSAs) in 2024. The annual contribution limit for health FSAs will see an increase, allowing employees to allocate additional funds towards their healthcare expenses. This adjustment reflects ongoing changes in the economic landscape and aims to provide enhanced support for individuals managing healthcare costs.
In 2024, the maximum contribution limit for health FSAs will be raised to $3,200, up from the current limit of $3,050. This $150 increase, while smaller compared to the previous year’s $200 rise, represents a continued effort to align contribution caps with inflationary trends. For employees whose employers permit the carryover of unused health FSA funds, the maximum carryover amount will also see an increase. In 2024, the carryover limit will be $640, which is $30 higher than the 2023 limit of $610.
The announcement of the revised health FSA limits is part of a broader series of inflation-related adjustments made by the IRS. These include modifications to various financial instruments and tax-related thresholds. For instance, the IRS also announced changes to the annual health savings account (HSA) contribution limits earlier in the year. In 2024, the limit for HSA contributions for self-only coverage will be $4,150 (a 7.8% increase from 2023), and for family coverage, it will be $8,300 (up 7.1% from the previous year).
Furthermore, the IRS has updated the federal tax brackets for the upcoming year. In 2024, the top tax rate of 37% will be applicable to individuals with taxable incomes exceeding $609,350 and married couples filing jointly with incomes over $731,200. These changes are indicative of the IRS’s efforts to accommodate the evolving financial landscape and provide relief amidst rising costs and economic shifts.
Source: www.shrm.org/ResourcesAndTools/fsa-2024-annual-contribution-limit