What Is the FSA Carryover Limit for 2026?

A flexible spending account (FSA) allows you to save up money for medical expenses. You can use this tax-advantaged fund to pay for costs like copays, deductibles and pharmaceuticals. For the most part, you have to spend the money in your FSA by the end of each year. However, the IRS allows you to keep a certain amount from year to year. This is called your “carryover.” In 2026, this carryover is $680, up from $660 in 2025.

For help with all of your financial planning concerns, consider working with a financial advisor.

What Is an FSA?

A Flexible Spending Account (FSA) is a tax-advantaged account that you can use to save up money for healthcare costs. You can use the money in your FSA to pay for qualifying expenses like insurance copays, deductibles, prescription drugs, over-the-counter medication, medical devices and other out-of-pocket costs. Most notably, you can not use a flexible spending account to pay for insurance premiums.

For a full list of healthcare expenses that you can spend FSA money on, see the IRS website. In most cases, you will make healthcare purchases as normal and then apply for reimbursement from your FSA.

An FSA works like a 401(k) or an IRA. You can contribute to this account tax-free, meaning that you don’t pay federal income taxes on any money that you put into your FSA. However, flexible spending accounts are employer-run only. You cannot set up or contribute to an FSA on your own. Instead, your employer will make contributions to this fund on your behalf and will not withhold federal income taxes from that money.

Each year the IRS allows you to put a maximum amount of money into your FSA. In 2026, contributions are capped at $3,400, up from $3,300 in 2025.

What Is a Carryover?

Flexible Spending Accounts come with one main restriction, and it’s a big one. Namely, you have to spend all the money in this account by the end of each plan year. You forfeit any money left unspent. (Most employers set their FSA plan year around either the end of the calendar year or the end of the company’s fiscal year.) Any money left in the account after this deadline is reclaimed by your employer. Employers usually use these reclaimed funds to pay FSA administrative fees.

This means that it’s important to get your contributions right. You want to estimate how much money you will spend on medical costs in the coming year. If you overestimate and are left with money left in your FSA, you lose it. If you underestimate your income, you can miss out on valuable tax benefits.

See how common tax breaks may affect what you owe by running your numbers through our calculator.

Your employer can offer two options to mitigate this effect:

• Grace Periods: You can have an extra 2.5 months each year to spend the money in your flex account. This means that instead of your employer reclaiming the money after 12 months, at the end of the plan year, they will reclaim any unspent money in your FSA after 14.5 months, after the grace period expires. During the 2.5 months when your grace period overlaps with the new year, you effectively have two pools of money in your FSA account: the new plan year’s contributions and any remainder from the previous year. Only this remainder is reclaimed at the end of the grace period.
• Carryover: Sometimes called a “rollover,” this allows you to keep some of the unspent money in your FSA from one year to the next. Note that carryovers are not cumulative. You can keep one, flat carryover amount from year to year.

Your employer can only offer one of these options, meaning that you can have a grace period or a carryover but not both. In 2026, you can carry over up to $680. This means that if you have money left in your FSA at the end of the plan year in 2026, for any reason, you can keep up to $680 of it. The rest goes back to your employer.

Bottom Line

Flexible Spending Accounts (FSAs) offer a valuable way to set aside pre-tax dollars for eligible medical expenses. But knowing how much you can carry over from year to year is essential for effective financial planning. For 2026, the IRS has set the FSA carryover limit at $680, allowing employees to roll over this amount into the next plan year if they have unused funds. This increase from previous years provides more flexibility. It also reduces the pressure to spend all your FSA funds by the end of the year.

Savings Tips

• A flexible savings account is similar to health savings accounts but different in critical ways. Make sure you figure out which one is right for you.
• If you still have questions about how to use an FSA, consider working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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