The $680 FSA Carryover Is the Limit for Plan Years Beginning in 2026 — Not the Amount Rolling Into 2026
IRS Rev. Proc. 2025-32 sets the health FSA salary reduction limit at $3,400 and the maximum carryover at $680 for taxable years beginning in 2026, and only if the plan permits carryover.
★★Which year the $680 belongs to
Guides to the FSA carryover often put two numbers side by side — ★**$660 and $680** — and it is easy to come away unsure which one applies to you. ★**The revenue procedure removes the ambiguity with a single opening clause.**[1]
The text reads: ★**"For taxable years beginning in 2026, the dollar limitation under § 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $3,400. If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is $680."**[1][2]
★★**So $680 is attached to the plan year that begins in 2026** — ★**it caps what can move from that year into the next one**. ★**It is not the figure that carried into 2026 from the year before.** ★**The two numbers describe different plan years, which is why they are easy to swap.**[1]
★The carryover exists only if the plan provides for it
★**The sentence is conditional, and the condition is doing real work.** The limit applies ★**"if the cafeteria plan permits the carryover of unused amounts."**[1]
★**The IRS sets a ceiling; it does not grant the carryover.** ★**Whether any carryover exists at all is a feature of the employer's plan** — ★**so "the FSA carryover is $680" is a statement about the maximum, not about what every participant has.**[1]
★The same section also fixes the contribution side: ★**$3,400** in salary reductions for taxable years beginning in 2026. ★**The contribution limit and the carryover limit are separate figures in the same paragraph**, and both are keyed to that same plan-year language.[1][2]
★Where this figure comes from, and what else moved with it
The adjustment sits in ★**Rev. Proc. 2025-32**, which the Bulletin describes as modifying ★**certain sections of Rev. Proc. 2024-40** to reflect amendments to the Internal Revenue Code by ★**Public Law 119-21 (July 4, 2025)**.[2]
★**It is an annual inflation-adjustment document, not an FSA-specific rule** — the cafeteria plan figures appear as section 4.15 among many other 2026 adjusted items. ★**The neighbouring section 4.16 sets the qualified transportation fringe benefit monthly limitation at $340.**[1]
★**That context matters when checking a number.** ★**Because these limits are re-issued each year in a new revenue procedure**, ★**a figure quoted without its revenue procedure number and its "taxable years beginning in" year cannot be pinned to a plan year** — which is how $660 and $680 end up in the same paragraph elsewhere.[1][2]
Verified facts
Cross-checked against 2+ independent sourcesThis section contains facts cross-checked against multiple sources.
Reported, not confirmed
Not cross-checked — do not read as factFrom here on: claims and speculation that are not cross-checked.
Rev. Proc. 2025-32 states that for taxable years beginning in 2026, the dollar limitation under § 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $3,400, and if the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is $680.[1][2] single-source ×2 · Rev. Proc. 2025-32 section 4.15 "Cafeteria Plans"; the same text appears in Internal Revenue Bulletin 2025-45
The carryover is conditional on plan design — the revenue procedure states the maximum applies "if the cafeteria plan permits the carryover of unused amounts."[1] single-source ×1 · Rev. Proc. 2025-32 section 4.15, conditional clause
Rev. Proc. 2025-32 modifies certain sections of Rev. Proc. 2024-40 to reflect amendments to the Internal Revenue Code by Public Law 119-21 (July 4, 2025).[2] single-source ×1 · Internal Revenue Bulletin 2025-45 summary of Rev. Proc. 2025-32
Rev. Proc. 2025-32 also sets the 2026 qualified transportation fringe benefit monthly limitation under § 132(f)(2)(A) at $340.[1] single-source ×1 · Rev. Proc. 2025-32 section 4.16
Timeline
- 2025-11-03
Rev. Proc. 2025-32 published in Internal Revenue Bulletin 2025-45.[2]
- Model
- claude-opus-5
- Time
- 09/12/2026, 22:05
- Tokens
- 26,000
- Sources
- 2 sources adopted
- Model
- claude-opus-5 (separate review pass)
- Time
- 09/12/2026, 22:05
- Tokens
- 0
- Verdict
- Passed
Show revision history (1)
| 09/12/2026, 22:05 | First authored (claude-opus-5) | Created |
Frequently asked
Is the FSA carryover limit $660 or $680?
Rev. Proc. 2025-32 states that for taxable years beginning in 2026, the maximum carryover amount is $680, alongside a $3,400 salary reduction limit. The $680 figure is tied to the plan year beginning in 2026, so it caps what moves out of that year rather than what came into it.[1][2]
Does every FSA have a carryover?
No. The revenue procedure applies the maximum only "if the cafeteria plan permits the carryover of unused amounts." The IRS sets the ceiling; whether a carryover is offered at all depends on the employer's plan.[1]
What is the health FSA contribution limit for 2026?
For taxable years beginning in 2026, the dollar limitation under § 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $3,400.[1][2]
Where does the 2026 figure come from?
Rev. Proc. 2025-32, published in Internal Revenue Bulletin 2025-45, which modifies certain sections of Rev. Proc. 2024-40 to reflect amendments made by Public Law 119-21 of July 4, 2025.[2]
Official links
Sources
- [1] Rev. Proc. 2025-32 primary
- [2] Internal Revenue Bulletin No. 2025-45 primary