The IRS released cost-of-living-adjustments (COLAs) for 2026 reflecting any increases in excludable transportation fringes and the flexible spending arrangement (FSA) deferral limit, among other changes [Rev. Proc. 2025-32, 10-9-25].

For 2026, the amounts that may be excluded from gross income for employer-provided qualified transportation fringe benefits and qualified parking increase to $340 per month ($325 in 2025).

For plan years beginning in 2026, the dollar limitation for voluntary employee salary reductions for contributions to health FSAs increases to $3,400 ($3,300 in 2025). For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount increases to $680 ($660 in 2025).

The Revenue Procedure also addresses changes for 2025 made by Public Law 119-21, known as the One Big Beautiful Bill Act.

Courtesy of PayrollOrg – Jyme Mariani, Esq.