For 2026 the limits are $5,250 education, $7,500 dependent care, $3,400 health FSA, $340 monthly commuting and $24,500 for employee 401(k) contributions, according to the Internal Revenue Service and its 401(k) announcement.
Key takeaways
- The IRS states the 2026 401(k) contribution limit is $24,500, up from $23,500 in 2025, according to Internal Revenue Service.
- The monthly exclusion for qualified parking is $340, and the monthly exclusion for commuter highway vehicle transportation and transit passes is $340 for 2026, according to Internal Revenue Service.
- A cafeteria plan may not allow salary reduction contributions for a health FSA in excess of $3,400 for plan years beginning in 2026, according to Internal Revenue Service.
- The annual dependent care FSA limit for the 2026 tax year is $7,500, raised from $5,000, according to Internal Revenue Service.
- The $5,250 exclusion from income for employer-provided educational assistance applies to payments made after 2025, according to Internal Revenue Service.
Five dollar limits the agencies state for 2026
The Internal Revenue Service states these five specific dollar limits for 2026 in its employer guidance. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits, provides the figures for fringe benefits and cafeteria plans. The IRS newsroom provides the figure for retirement plan contributions. For related rules on what a new hire can receive, see our guide to new hire benefits rules.
Education help. The IRS states that 119-21 permanently extends the $5,250 exclusion from income for employer-provided educational assistance for payments made after 2025, according to Internal Revenue Service.
Dependent care. For the 2026 tax year, the annual dependent care FSA limit was raised from $5,000 to $7,500, according to Internal Revenue Service. The same source says the married-filing-separately limit was raised from $2,500 to $3,750.
Health spending. For plan years beginning in 2026, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $3,400, according to Internal Revenue Service.
Commuting. For 2026, the monthly exclusion for qualified parking is $340 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $340, according to Internal Revenue Service.
401(k) contributions. The amount individuals can contribute to their 401(k) plans in 2026 has increased to $24,500, up from $23,500 for 2025, according to Internal Revenue Service.
Education help and dependent care limits
The 26 U.S. Code § 127 - Educational assistance programs | U.S. Code | US Law | LII / Legal Information Institute page states that if the section would exclude more than $5,250 of educational assistance furnished to an individual during a calendar year, the section applies only to the first $5,250 of such assistance, according to Cornell Legal Information Institute. The U.S.C. Title 26 - INTERNAL REVENUE CODE page provides the identical language regarding the $5,250 limit for educational assistance furnished to an individual during a calendar year, according to U.S. Government Publishing Office. When drafting an offer letter that names an education benefit, quote the $5,250 figure as the statutory cap described in these sources.
The 26 U.S. Code § 129 - Dependent care assistance programs | U.S. Code | US Law | LII / Legal Information Institute page states that the amount which may be excluded for dependent care assistance with respect to dependent care services provided during a taxable year shall not exceed $7,500, or $3,750 in the case of a separate return by a married individual, according to Cornell Legal Information Institute. The same page notes that for purposes of subparagraph (A), in the case of any benefits provided through a salary reduction agreement, a plan may disregard any employees whose compensation is less than $25,000, according to Cornell Legal Information Institute. This $25,000 compensation threshold is a specific rule for salary reduction agreements under this statute.
For the offer letter, verify that the dependent care figure matches the $7,500 limit stated for a taxable year. If the offer letter specifies a salary reduction arrangement, note that the plan may disregard employees with compensation under $25,000 for the purposes of subparagraph (A). The education limit remains $5,250 for the calendar year as stated in the educational assistance programs section. Do not conflate the two figures; the $5,250 applies to educational assistance, while the $7,500 applies to dependent care assistance.
Health spending, commuting and 401(k) limits
When your offer letter mentions a 401(k) plan, the specific dollar figures you quote must match the agency’s current statements for the relevant plan year. The Internal Revenue Service publishes these limits for 2026, and your draft should reflect exactly what those pages state.
For 401(k) plans, the amount individuals can contribute to their 401(k) plans in 2026 has increased to $24,500, up from $23,500 for 2025, according to Internal Revenue Service. If your benefits sheet lists an employee 401(k) contribution limit, verify that $24,500 is the figure you cite for the 2026 plan year.
On its retirement topics page, the IRS states that for 2026, the higher catch-up contribution limit is $11,250, according to Internal Revenue Service. If your offer letter mentions catch-up contributions, check eligibility and the applicable catch-up amount against your plan documents, and review our age and benefits rules before you describe who qualifies.
The IRS also addresses catch-up limits for SIMPLE plans. The newsroom page notes that the catch-up contribution limit that generally applies for employees aged 50 and over who participate in most SIMPLE plans is increased to $4,000, up from $3,500 for 2025, according to Internal Revenue Service. If you offer a SIMPLE 401(k) plan, ensure your offer letter distinguishes this $4,000 catch-up amount from the higher $11,250 catch-up amount.
The limit on annual contributions to an IRA is increased to $7,500 from $7,000, according to Internal Revenue Service. If your offer letter references the annual IRA contribution limit, the $7,500 figure is the one the IRS states for 2026.
Federal FSA program details
The U.S. Office of Personnel Management page on Flexible Spending Accounts states that the average tax savings for a person who contributes $3,400 into an FSA account is approximately $1,020, according to U.S. Office of Personnel Management. This figure describes the average savings within that specific federal program context and does not define the tax treatment for every individual employee or every private employer. The same page notes that the minimum election for all accounts is just $100 and carryover has been adopted for health care and limited expense health care FSAs, according to U.S. Office of Personnel Management. These details apply to the program described on that page and do not establish a universal rule for all benefit plans.
Reference table of each publisher's dollar limit
The table below lists the five benefit dollar limits for 2026. Each row names the publisher and the specific limit stated on its page.
| Publisher | Benefit Category | 2026 Limit | Source Page |
|---|---|---|---|
| Internal Revenue Service | Education help | $5,250 | Internal Revenue Service |
| Internal Revenue Service | Dependent care | $7,500 | Internal Revenue Service |
| Internal Revenue Service | Health spending | $3,400 | Internal Revenue Service |
| Internal Revenue Service | Commuting | $340 | Internal Revenue Service |
| Internal Revenue Service | 401(k) pay | $24,500 | Internal Revenue Service |
The Internal Revenue Service states the $5,250 exclusion for employer-provided educational assistance for payments made after 2025 according to Internal Revenue Service. The same agency states the $7,500 annual dependent care FSA limit for the 2026 tax year according to Internal Revenue Service. For plan years beginning in 2026, the agency states a health FSA limit of $3,400 according to Internal Revenue Service. The agency also states a monthly exclusion of $340 for qualified parking and transit passes for 2026 according to Internal Revenue Service. Finally, the agency states the 2026 401(k) contribution limit is $24,500 according to Internal Revenue Service.
Worksheet for the figures in one offer letter
Use this worksheet to compare the specific dollar figures in your draft offer letter against the verified limits. The Internal Revenue Service states that for 2026, the monthly exclusion for qualified parking is $340 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $340. Add one row for each benefit, and fill it in only after you have located the matching figure in the reference table above. This keeps your documentation aligned with the agency-stated limits for the current plan year.
| Benefit Named in Offer | Dollar Figure in Draft | Matches Table? | Source Page Checked |
|---|---|---|---|
| Example | The figure copied from the draft letter | Yes or no | The reference page you compared it with |
Illustrative example of checking one draft
A draft letter promises a $5,000 dependent care benefit and a $3,500 health FSA. The writer compares both against the reference table. The 2026 dependent care limit is $7,500, and $5,000 is the older figure it was raised from, so the writer checks the plan and updates the letter to match. The health FSA limit is $3,400, so the $3,500 figure is above the limit and is corrected. The parking line says $340 a month, which matches the table. The writer records each result in the worksheet before sending the letter.
Next step
Open the draft offer letter and circle every dollar figure that names a benefit limit. Compare each circled number to the reference table before you send the letter.
Benefit dollar limits FAQ
What is the education help exclusion limit?
The exclusion is limited to $5,250 of educational assistance furnished to an individual during a calendar year, according to Cornell Legal Information Institute. Amounts above $5,250 fall outside the exclusion.
What is the dependent care figure for 2026?
For married filing separately, the limit was raised from $2,500 to $3,750, so $3,750 applies for 2026.
What is the health FSA limit for plan years beginning in 2026?
The limit is $3,400 for plan years beginning in 2026, according to Internal Revenue Service. A cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA above that amount, and the limit applies specifically to salary reduction contributions within a cafeteria plan.
What is the 401(k) limit for 2026?
The 2026 limit on individual 401(k) contributions is $24,500, up from $23,500 for 2025, according to Internal Revenue Service. This figure represents the annual contribution limit for 2026.
What is the monthly parking exclusion for 2026?
The monthly exclusion for qualified parking is $340 for 2026, according to Internal Revenue Service. The same $340 monthly exclusion applies to commuter highway vehicle transportation and transit passes.