The IRS recently released a list of 2026 cost-of-living adjustments (COLAs) that include increases to qualified transportation fringes, increases in contribution limits for multiple types of health savings accounts and more. These changes fall under Revenue Procedure 2025-32, 10-9-25 and also include changes made for tax year 2025 by the One Big Beautiful Bill Act (OBBBA).
Qualified Transportation Fringes
The amount of money you can exclude from your gross income for employer-provided qualified transportation fringe benefits (transportation in a commuter highway vehicle and any transit pass) and qualified parking will increase from $325 in 2025 to $340 in 2026.
Health Flexible Spending Accounts
There will be an increase on voluntary employee salary reductions for plan years beginning in 2026 for health flexible spending accounts (from $3,300 in 2025 to $3,400 in 2026).
Cafeteria plans that permit the carryover of unused amounts will see the maximum carryover amount increase from $660 in 2025 to $680 in 2026.
Self-Only High-Deductible Health Plans
If you have a self-only high-deductible health plan (HDHP), your health savings account contribution limit will increase to $4,400 in 2026, up from $4,300 in 2025.
If you are 55 or older, the catch-up limit remains $1,000.
In 2026, the minimum deductible amount will increase from $1,650 in 2025 to $1,700, and the maximum annual out-of-pocket cost limit will increase to $8,500, up from $8,300 in 2025.
Family High-Deductible Health Plan
If you have a family HDHP, coverage will increase from $8,550 in 2025 to $8,750 in 2026.
In 2026, the minimum deductible for family coverage will increase to $3,400, up from $3,300 in 2025. The maximum out-of-pocket limit will increase to $17,000, up from $16,600 in 2025.
Medical Savings Accounts
In 2026, for you or your employer to make contributions to a medical savings account, you must be covered by an HDHP, which is a plan with a deductible of $2,900-$4,400 for individual coverage (up from $2,850-$4,300 in 2025) and $5,850-$8,750 for family coverage (up from $5,700-$8,550 in 2025).
Maximum Out-of-Pocket Expenses
- No more than $5,850 for individual coverage (up from $5,700 in 2025)
- No more than $10,700 for family coverage (up from $10,500 in 2025)
Qualified Small Employer HRA
For 2026, a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) allows small employers to reimburse employees for their medical expenses. There are yearly limits:
- For individual employees: The maximum reimbursement is $6,450 (an increase from $6,350 in 2025).
- For employees with family coverage: The maximum reimbursement is $13,100 (an increase from $12,800 in 2025).
Standard Deduction
The OBBBA increased the standard deduction amounts for taxpayers, and they are increasing again in 2026.
- Married couples filing jointly or surviving spouses: $32,200, up from $31,500
- Single taxpayers and married taxpayers filing separately: $16,100, up from $15,750
- Heads of household: $24,150, up from $23,625
Federal Tax Levies
For tax years starting in 2026, the dollar amount needed to calculate protections under IRC §6334(d)(4)(B) increases to $5,300 (up from $5,100 in 2025).
Foreign Earned Income Exclusion
For 2026, the maximum foreign earned income exclusion amount under IRC §911(b)(2)(D)(i) will increase from $130,000 in 2025 to $132,900. The maximum amount of the foreign housing cost exclusion increases from $18,200 in 2025 to $18,606.
Adoption Assistance
- Employees can leave out up to $17,670 from their taxable income for qualified adoption expenses paid through their employer’s adoption assistance program. This is an increase from $17,280 in 2025.
- This tax benefit starts to phase out if you have an adjusted gross income over $265,080, up from $259,190 in 2025.
- The benefit is completely phased out if your adjusted gross income exceeds $305,080, an increase from $299,190 in 2025.
If you have questions about how these limitations will affect you, contact your RKL advisor today or reach out to our Virtual Management Solutions team to see how we can help.
