Employees planning to open a health care flexible spending arrangement (FSA) account can contribute $100 more for the 2025 plan year, according to the U.S. Internal Revenue Service (IRS).
“If the plan allows, the employer may also contribute to an employee’s FSA,” the agency said. “If the employee’s spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household.”
In case the individual does not utilize the full amount in the FSA account for a specific year, only a small portion will be allowed to carry forward. The maximum carryover allowed for 2025 is $660, up from $640 this year.
A key benefit of an FSA is that amounts contributed to the account are not subject to federal income tax, social security tax, or Medicare tax.
The IRS advises employees to plan out their health care activities to effectively calculate how much to contribute to FSAs. Such plans should take into account big-ticket expenses, seasonal needs such as allergy products or sunscreen, over-the-counter items eligible for FSA, and routine checkups or visits with specialists not covered under regular insurance plans.
For 401(k) plans, the limit has been raised to $23,500 in 2025, up by $500 from this year. The same limit applies to 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan.
The threshold for annual contributions to Individual Retirement Accounts were kept the same at $7,000.
Standard deductions have been bumped up by $400 to $15,000 for individual taxpayers, and by $800 to $30,000 for married couples filing jointly.