Employees may contribute up to $3,050 to flexible spending accounts in 2023, the IRS announced Tuesday.
The update represents a “relatively large increase” — a $200 jump — over this year’s $2,850, according to Lisa Myers, director of client services, benefits accounts, at advisory firm WTW. The shift is due to high inflation levels, Myers said in a statement provided to HR Dive; the previous adjustment increased the cap by $100.
The new limit applies to plan years beginning in 2023, Myers continued. And for cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $610 — an increase of $40, the IRS said.
The IRS notice also announced that the updated monthly cap on commuter benefit contributions will be $300 — a $20 increase — and the maximum credit for adoption assistance will increase more than $1,000 to $15,950.
Correction: An earlier version of this article misspelled Myers’ name. The story has been updated to reflect the correct spelling.