2026 IRS Benefit Updates - Key Highlights

The IRS has released its 2026 benefit updates, bringing several contribution limit increases and compliance considerations for employers. Below is a snapshot of the most important changes HR and benefits teams should review to ensure plans, payroll, and employee communications are aligned for the year.

Health FSA Limits
- Contribution limit increases to $3,400 (up from $3,300 in 2025).
- Maximum carryover rises to $680 (up from $660).
- Update plan documents and employee communications before open enrollment.
Commuter & Parking Benefits
- Monthly limit for transportation and parking increases to $340 (up from $325).
- Ensure payroll systems and benefit platforms reflect new limits.
QSEHRA (Small Employer Health Reimbursement Arrangement)
- Self-only coverage cap: $6,450.
- Family coverage cap: $13,100.
- Review reimbursement policies for compliance.
Adoption Assistance
- Excludable amount rises to $17,670.
- Phase-out begins at $265,080 MAGI, ends at $305,080.
Small Employer Health Insurance Credit
- Phase-out wage level increases to $34,100 (up from $33,300).
- Applies to employers with more than 10 FTEs claiming the credit.
ACA Information Return Penalties
- No changes for 2026.
- Penalty remains $340 per return, with reduced amounts for timely corrections.