The IRS has released Revenue Procedures 2024-25, 2024-40 and Notice 2024-80, which set forth the 2025 inflation-adjusted limits for certain employee welfare benefit plans and the dollar amounts used for certain nondiscrimination testing.
Health Flexible Spending Arrangements. The 2025 limit for employee salary reduction contributions to health FSAs increases to $3,300 (up $100 from 2024). If a cafeteria plan permits the carryover of unused amounts, the maximum permitted carryover amount increases to $660 (up $20 from 2024).
Dependent Care. The limit for dependent care flexible spending account contributions, and the maximum tax-exempt benefit from a dependent care assistance plan remains at $5,000 ($2,500 if married and filing separately), as this amount is not indexed to inflation.
Transportation and Parking. For taxable years beginning in 2025, the qualified transportation benefit limit for transit passes and for qualified parking increases to $325 per month (up $10 from 2024).
Health Savings Accounts. For 2025, the HSA contribution limit for a self-only HSA is $4,300 (up from $4,150 in calendar year 2024) and $8,550 for a family HSA (increased from $8,300 for calendar year 2024).
To qualify as high deductible health plan in 2025, a plan must have a minimum annual deductible of at least $1,650 for self-only coverage ($1,600 in 2024), and $3,300 for family coverage ($3,200 in 2024). The maximum out-of-pocket expenses permitted for an HDHP is $8,300 for self-only coverage ($8,050 in 2024) and $16,600 for family coverage ($16,100 in 2024).
Excepted Benefit Health Reimbursement Account. For plan years beginning in 2025, the maximum amount that may be made available by an employer for an excepted benefit HRA is $2,150 (up from $2,100 for the 2024 plan year).
Highly Compensated Employee. The total number of highly compensated employees (or “HCEs”) must be determined for several welfare plan nondiscrimination tests. For the 2025 plan year, the IRS has announced that an employee who earned more than $160,000 during the look-back year (i.e., the preceding 12-month period) is an HCE (up from $155,000 in 2024). Thus, in the 2025 plan year, an employee who earned more than $155,000 during the 2024 plan year is an HCE.
Revenue Procedure 2024-25 is available at: https://www.irs.gov/pub/irs-drop/rp-24-25.pdf
Revenue Procedure 2024-40 is available at: https://www.irs.gov/pub/irs-drop/rp-24-40.pdf
Notice 2024-80 is available at: https://www.irs.gov/pub/irs-drop/n-24-80.pdf