The Internal Revenue Service (IRS) recently announced annual inflation adjustments for more than 50 tax provisions, including an increase in voluntary employee contributions to employer-sponsored healthcare flexible spending arrangements (HFSAs) to $2,850 for plan years beginning in 2022, up from the 2021 limit of $2,750.

For HFSAs that include a carryover provision, up to $570 may be carried over from the 2022 plan year to the next plan year. Note that HFSAs had the option of allowing an unlimited carryover for the 2021 plan year due to federal COVID-19 relief provisions. For unused HFSA funds at the end of the 2022 plan year, however, the plan cannot allow more than $570 to be carried over for use in the following year.

The IRS also announced an increase in the 2022 monthly limits for qualified transportation fringe benefits under Code § 132(f). For transportation in a commuter highway vehicle and mass transit passes, the limit will be $280 (up from $270 this year). The separate monthly limit for qualified parking also will increase to $280.

Details of this announcement can be found in Revenue Procedure 2021-45.

Originally posted by the Human Resources Experts at ThinkHr.