Quick Answer: A Flexible Spending Account (FSA) is an employer-sponsored account that reduces your taxable income by letting you pay for qualified medical expenses with pre-tax dollars. The 2026 health FSA limit is $3,400 per employee; employers may also allow a $680 carryover into the next plan year. FSAs are distinct from [Health Savings Accounts](/glossary/hsa), which require enrollment in a high-deductible health plan. After paying your provider, you can use the [medical bill analyzer](/medical-bill-analyzer) to confirm what portion your FSA should cover.
Annual Flexible Spending Account (FSA) Limits
Current annual limits| Account Type | 2026 Limit | Notes |
|---|
| Health FSA | $3,400 / year | Per employee; employer may also contribute |
| Health FSA carryover | $680 max | Employer must opt in; any excess is forfeited |
| Dependent Care FSA | $7,500 / year | $3,750 if married filing separately |
Source: [IRS Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf) (health FSA and carryover limits). Dependent Care FSA limit per the One Big Beautiful Bill Act. Verify your plan year with your employer.
Source: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
Health FSA vs. Dependent Care FSA
A health FSA reimburses IRS-defined medical expenses: copays, prescriptions, dental, vision, and over-the-counter items. A dependent care FSA covers childcare and elder care costs so you can work. The two accounts run separately. Neither counts toward ACA income limits because FSA contributions are excluded from federal poverty level income calculations under MAGI rules.
Frequently Asked Questions
What is the 2026 FSA contribution limit?
The 2026 health FSA limit is $3,400 per employee, up from $3,300 in 2025. If both spouses have employer FSAs, each may contribute up to the full individual limit. Employers may also add contributions on top of the employee limit.
What happens to unused FSA funds at year end?
Under the use-it-or-lose-it rule, unused health FSA funds are forfeited at plan year end. Employers may allow either a $680 carryover (2026 max) or a 2.5-month grace period, but not both. Check your Summary Plan Description for your employer's choice.
Can I have both an FSA and an HSA?
Generally no. A standard health FSA disqualifies you from contributing to an HSA. The exception is a limited-purpose FSA, restricted to dental and vision expenses, which is HSA-compatible. See [ACA income limits](/aca-income-limits) if you are also comparing Marketplace plan options alongside employer coverage.
