The IRS announced the changes to the dollar limits on benefits and contributions under qualified retirement plans, as well as other items, for tax year 2025 [Notice 2024-80, 11-1-24].

2025 COLAs for Transportation Fringes, FSA Deferrals

For 2025, the amounts that may be excluded from gross income for employer-provided qualified transportation fringe benefits and qualified parking increase to $325 per month ($315 in 2024)
For plan years beginning in 2025, the dollar limitation for voluntary employee salary reductions for contributions to health FSAs increases to $3,300 ($3,200 in 2024). For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount increases to $660 ($640 in 2024).

The Social Security Administration (SSA) announced on Thursday, October 10, that the 2025 social security wage base will be $176,100, an increase of $7,500 from $168,600 in 2024. As in prior years, there is no limit to the wages subject to the Medicare tax; therefore, all covered wages are subject to the 1.45% tax. As in 2024, wages paid in excess of $200,000 in 2025 will be subject to an extra 0.9% Medicare tax that will only be withheld from employees’ wages. Employers will not pay the extra tax.

The IRS released the optional “high-low” per diem rates for lodging expenses and meals and incidental expenses (M&IE) that may be used instead of the General Services Administration’s “actual” per diem rates for travel to locations within the continental U.S (CONUS).

The IRS released its annual inflation adjustment to the percentage of household income used to determine whether an employer’s offer of health care coverage under the Affordable Care Act (ACA) is affordable [Rev. Proc. 2024-35, 9-6-24].

On July 17, the IRS announced that some amended employment tax returns can be electronically filed using the Modernized e-File (MeF) program [IRS, Post Release Changes to Forms, Electronic Filing of Some Amended Employment Tax Returns Is Now Available, 7-17-24].

Employers should check before July 1 to ensure they are in compliance with the minimum salary levels required for their exempt employees. On July 1, the minimum salary level for exempt employees increases from $684 to $844 per week as changes made to the Fair Labor Standards Act (FLSA) executive, administrative, professional, outside sales, and computer employee (EAP) or “white collar” exemptions go into effect.

On April 23, the U.S. Department of Labor (DOL) announced a final rule to increase the minimum salary level for the Fair Labor Standards Act “white collar” exemptions in two steps:

• • On July 1, the minimum salary level increases from $684 to $844 per week (or from $35,568 per year to $43,888 per year)

• • On January 1, 2025, the minimum salary level increases from $844 to $1,128 per week (or from $43,888 per year to $58,656 per year)

The Board of Trustees of the Social Security Trust Fund reports each year on the financial condition of the social security program. The 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, issued on May 6, includes both short- and long-term projections about the social security system.

The IRS announced the 2025 maximum contribution levels for health savings accounts (HSAs) and out-of-pocket spending limits and deductible minimums for high deductible health plans (HDHPs) that must be used in conjunction with HSAs [Rev. Proc. 2024-25, 5-9-24].