The Internal Revenue Service (IRS) has released Revenue Procedure 2022-38, which increases the health flexible spending account (FSA) salary reduction contribution limit from 2022. The limit on annual employee contributions toward health FSAs for 2023 is $3,050, with the ability to carryover up to $610 to FSAs with plan years beginning in 2024.
The Revenue Procedure also contains the cost-of-living adjustments that apply to dollar limitations in certain sections of the Internal Revenue Code.
Qualified Commuter Parking and Mass Transit Pass Monthly Limit
For 2023, the monthly limits for qualified parking and mass transit are $300 each (which is a slight increase from 2022).
Adoption Assistance Tax Credit Increase
For 2023, the credit allowed for adoption of a child is $15,950 (up $1,060 from 2022). The credit begins to phase out for taxpayers with modified adjusted gross income in excess of $239,230 and is completely phased out for taxpayers with modified adjusted gross income of $279,230 or more.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Increase
For 2022, reimbursements under a QSEHRA cannot exceed $5,850 (single) / $11,800 (family), an increase of $400 (single) / $750 (family) from 2022.
Reminder: 2023 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits
Earlier this year, the IRS announced the inflation adjusted amounts for HSAs and high deductible health plans (HDHPs). Those limits can be reviewed here.