Open Enrollment Reminder: 2024 FSA Contribution Limit Set at $3,200
That's a $150 increase from 2023.
The Internal Revenue Service published its annual inflation adjustments several weeks ago for more than 60 tax provisions for tax year 2024, and included in the update was a $150 increase in the limit for annual contributions to flexible spending arrangements (FSAs).
Now that it is open enrollment season for workplace retirement and health care benefits, the IRS is reminding taxpayers about their opportunity to contribute up to $3,200 to an FSA in 2024.
The new limit means married couples can jointly contribute up to $6,400 for their household, assuming both spouses have access to an FSA-eligible plan in their own workplace.
Through an FSA, taxpayers may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans. Adding to the potential tax benefit, amounts contributed to FSA are generally not subject to federal income tax, Social Security tax or Medicare tax.
For FSAs that permit the carryover of unused amounts, the maximum 2024 carryover amount to 2025 will be $640. For 2023, the maximum unused amount that can be carried over to 2024 is $610.
As the IRS emphasizes, it is important for taxpayers to annually review their health care selections during health care open enrollment season and maximize their savings. Under the law, eligible employees of companies that offer health care FSAs need to act before their medical plan year begins.
Expenses that can be covered by an FSA include co-pays, deductibles and a variety of medical products. Also covered are services ranging from dental and vision care to eyeglasses and hearing aids.
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