For those who have been waiting to hear about the new FSA amounts for the plan year 2023, the wait is over! The Internal Revenue Service (IRS) announced on October 18th the new tax year amounts that are adjusted for inflation. For the taxable year starting in 2023, the new Health Care Flexible Spending Account contribution increased to $3,050. With this extra $200 in your FSA, the IRS decided to expand the maximum carryover limit for plans that permit the “rollover” of unused amounts. This new maximum carryover limit increased to $610.
Unfortunately, those who utilize the Dependent Care FSA (DCFSA) will be able to contribute the same amount as last plan year, $5,000. This is still a decent amount of money and I hope it will continue to be helpful to those who need it. Although there is no change to the DCFSA, there is a slight growth for the Commuter benefits/Transit limit, which increased to $300.
Employees, please have conversations with your Human Resources specialist about what kind of Flexible Spending Accounts are offered and how it is included for the employer benefits in 2023. Employers, we encourage you to include this benefit for your employee if you have not already and make sure your employees are aware of the increase and what these accounts entail.
If you need a bit of help understanding how to use an FSA and/or what it is, please refer to this blog.
Also, please see the links below for further information about the tax adjustments for the 2023 year: