IRS Increases Pre-Tax Contributions for Health Accounts in 2025

The IRS has announced an increase in the maximum pre-tax amount individuals can contribute to flexible spending accounts for health care in 2025, raising it from $3,200 to $3,300. This year also marks the open enrollment season for federal employees, running from November 11 to December 9, allowing employees to elect funding for both health care and dependent care accounts, with the latter maintaining a maximum of $5,000.

Starting in 2025, individuals will be able to carry forward up to $660 from their health care accounts into 2026. For dependent care accounts, a 10-week grace period is still applicable for unspent amounts. In conjunction with these changes, the IRS has also increased the maximum amount allowed for the public transit subsidy program, now up to $325 per month.

Policies related to these benefits may vary across different agencies and locations, potentially influenced by labor-management agreements. The article highlights how different agencies manage subsidies and support for transit expenses, affecting federal employees' pre-tax income and overall benefits realm.