Using your FSA wisely? Up to $3,400 can be set aside pre-tax in 2026, and millions of workers forget to claim every single dollar of it

American workers can put up to $3,400 into a health Flexible Spending Account (FSA) in 2026. The money can help cover eligible medical expenses while reducing the wages subject to federal income tax. Yet the higher limit is only useful if employees understand how these accounts work and remember to use the money before their plan's deadline.

The IRS has also announced its 2026 tax adjustments, including changes connected to the One Big Beautiful Bill Act.

FSA limit rises to $3,400 in 2026

The 2026 health FSA contribution limit is $100 higher than the $3,300 limit for 2025. Employees can use these accounts to pay for eligible expenses, which may include prescription medicines, dental treatment, eye care and other qualified healthcare costs.


The main advantage is the tax treatment. Contributions are generally deducted from pay before federal income tax is calculated. That means an employee can set aside money for healthcare while lowering their taxable wages.

For someone contributing the full $3,400, the amount works out to roughly $283 a month over a year. The tax savings will vary, though, depending on the person's income and tax situation. The full contribution is not the amount saved in taxes.

Why leaving FSA money unused can cost you

An FSA comes with a rule that employees shouldn't overlook; unused money may be forfeited at the end of the plan year. Some employers allow a limited carryover or offer a grace period, but these options aren't automatic.

For 2026, eligible plans can permit a carryover of up to $680. Whether an employee can use that option depends on the employer's plan rules.

This is why choosing a contribution amount requires some thought. Someone expecting regular dental appointments, prescription costs or other planned healthcare expenses may have a good reason to contribute more. Someone with fewer predictable expenses may prefer to set aside less rather than risk losing the balance.

Workers should check how much money remains in their accounts and find out which expenses qualify. They should also confirm the deadline for spending the money or submitting reimbursement claims. Waiting until the final days of the year can leave little time to sort things out.

The IRS has changed other tax figures for 2026

The FSA limit is one part of a wider set of IRS inflation adjustments. For 2026, the standard deduction rises to $16,100 for single filers and married people filing separately. Married couples filing jointly can claim $32,200, while heads of household can claim $24,150.

These amounts generally apply to income earned in 2026 and reported on tax returns filed in 2027.

The effect on each taxpayer will depend on earnings, filing status and other applicable deductions or credits.