By the PayAdvisors team · Published March 11, 2026 · Figures reviewed October 6, 2026
2026 FSA Limits: What Employers Must Update in Payroll
The health FSA limit is $3,400 for plan years beginning in 2026, and the dependent care FSA limit is $7,500 ($3,750 married filing separately).
A team of payroll and HR professionals
In short
Confirm 2026 limits in payroll and plan materials
Update deduction caps and test across payroll schedules
Align plan documents and open enrollment communications before elections go live
Treat 2026 FSA updates as a small implementation project: confirm the new limits, update payroll settings, review plan documents and tell employees before open enrollment.
In this article
What changed in 2026 Payroll system updates Plan document and open enrollment checklist Common payroll mistakes When to bring in payroll support IRS sources for each FSA type FSA payroll questionsWhat changed in 2026: health FSA vs dependent care FSA
These are the 2026 limits, from IRS Publication 15-B and Rev. Proc. 2025-32:
- Health FSA: $3,400 salary-reduction limit for plan years beginning in 2026.
- Health FSA carryover: if the plan permits carryover, up to $680 of unused funds can carry over into 2027 plan years. Employers may set a lower limit.
- Dependent care FSA: $7,500 per year ($3,750 married filing separately), up from $5,000.
Configure each plan type separately in payroll before open enrollment begins.
Payroll system updates: deductions, caps and testing
When FSA limits change, payroll systems must be updated before new elections take effect.
Review these areas when you update your payroll system:
Set deduction caps to the limit your plan adopted, within the IRS maximum, so elections cannot exceed it
Confirm annual elections calculate correctly across each payroll schedule
Verify payroll frequencies such as weekly, biweekly or semimonthly process deductions properly
Run payroll tests before the first payroll of the year to confirm limits apply correctly
Want the deduction caps updated and tested before the first run of the year?
We help employers update payroll deduction limits and review benefits payroll configurations, inside the system you already use.
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Plan document and open enrollment checklist
Payroll updates alone are not enough to ensure FSA compliance. Plan documents, enrollment materials and HR systems must all reference the same contribution limits.
Review plan documentation before open enrollment begins, and confirm whether the health FSA includes a carryover or grace period. Dependent care FSAs follow their own rules.
Explain the difference between health and dependent care FSAs in simple language, the limit for each, the “use it or lose it” rule and any rollover or grace period.
Common payroll mistakes (and how to catch them fast)
Some of the most common payroll mistakes include:
- Deduction caps not updated to the plan’s adopted limit, within the current IRS maximum
- Dependent care FSA limits set incorrectly in payroll systems
- Annual elections not calculating properly across payroll cycles
- Payroll and benefits systems failing to sync election data
Catch them by reviewing deduction reports after the first payroll of the year.
When to bring in payroll support
Multiple payroll schedules, connected benefits systems and midyear changes make FSA administration more complicated than expected.
Payroll service providers can help you update deduction settings, verify IRS limits and keep payroll reporting accurate.
IRS sources for each FSA type
The 2026 figures on this page come from IRS Publication 15-B and Rev. Proc. 2025-32. Before you change a deduction cap, check the IRS source for each account type and your own plan document.
Payroll, enrollment materials and the plan should all show the same limits.
Frequently asked questions
What are the 2026 FSA limits?
The health FSA limit is $3,400 for plan years beginning in 2026. If the plan permits carryover, up to $680 can carry over into 2027 plan years, though employers may set a lower limit. The dependent care FSA limit is $7,500 per year ($3,750 married filing separately), up from $5,000, per IRS Publication 15-B and Rev. Proc. 2025-32.
What must payroll update when FSA limits change?
Payroll must update the deduction cap for each FSA type. Then confirm annual elections calculate correctly across every pay schedule and run a test payroll before the first payroll of the year.
Do health FSAs and dependent care FSAs have the same limit?
No. For 2026, the health FSA limit is $3,400 and the dependent care FSA limit is $7,500. The two accounts also have different rules, so each must be configured separately in payroll.
When should deduction caps be updated?
Update deduction caps before new elections take effect. Then review deduction reports after the first payroll of the year to confirm every election falls within the correct limit.
Does a rollover or grace period affect FSA payroll?
Yes. Confirm whether the health FSA includes a carryover or grace period, since these rules affect how employees plan their contributions. Dependent care FSAs follow their own rules, so check each account type.
Next step
Get help with your 2026 FSA payroll updates
On the call, tell us which payroll system you use and where your FSA deductions are set up.