The projected 2027 health FSA contribution limit is $3,500, with a projected carryover limit of $700. That is a $100 increase over the official 2026 health FSA cap of $3,400 and a $20 increase over the 2026 carryover of $680. These figures come from Mercer's June 2026 projection, which applies the IRS inflation-adjustment formula to published Chained CPI data. They are not official. The IRS confirms the real numbers in a revenue procedure usually released in October or November 2026.
If you are planning open enrollment elections for the 2027 plan year, the projection is the best available estimate, and historically these projections have landed on the exact number.
Projected 2027 FSA Limits at a Glance
| Limit | 2025 (official) | 2026 (official) | 2027 (projected) |
|---|
| Health FSA salary reduction | $3,300 | $3,400 | $3,500 |
| Health FSA carryover | $660 | $680 | $700 |
| Dependent Care FSA (married/joint or single) | $5,000 | $7,500 | $7,500 |
| Dependent Care FSA (married filing separately) | $2,500 | $3,750 | $3,750 |
| Commuter benefit (transit or parking, monthly) | $325 | $340 | $350 |
Sources: IRS Revenue Procedure 2025-32 for the 2026 figures; Mercer's 2027 projection published June 11, 2026, for the 2027 column. The 2027 numbers are estimates until the IRS publishes its official revenue procedure.
Why the Projected Health FSA Limit Is $3,500
The health FSA limit is not set by an agency deciding on a number. Internal Revenue Code Section 125(i) fixes a base dollar amount and requires it to be adjusted each year for cost of living using the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), then rounded down to the nearest $50.
That rounding rule is why the limit moves in $50 or $100 steps rather than tracking inflation exactly:
- 2023: $3,050
- 2024: $3,200
- 2025: $3,300
- 2026: $3,400
- 2027: $3,500 (projected)
Actuarial and benefits firms can reliably project the number by mid-summer because most of the C-CPI-U data used in the calculation has already been published by then. Only the July and August values need to be estimated. With the increase running at roughly 2.5 to 3 percent and the $50 rounding floor, a $100 bump to $3,500 is the outcome unless late-summer inflation data comes in unusually low, which would leave the limit at $3,450.
The carryover limit is a separate but linked calculation. It is capped at 20 percent of the health FSA salary reduction limit, rounded to the nearest $10. Twenty percent of $3,500 is $700, which matches the projection.
What Is Already Confirmed for 2027
Not everything for 2027 is a guess. The IRS released Revenue Procedure 2026-24 on May 29, 2026, setting the official 2027 HSA and HDHP figures. These matter to FSA planning because HSA enrollment restricts which type of FSA you can use.
| 2027 HSA / HDHP limit (official) | Amount |
|---|
| HSA contribution, self-only | $4,500 |
| HSA contribution, family | $9,000 |
| HSA catch-up (age 55+) | $1,000 |
| HDHP minimum deductible, self-only | $1,750 |
| HDHP minimum deductible, family | $3,500 |
| HDHP out-of-pocket max, self-only | $8,700 |
| HDHP out-of-pocket max, family | $17,400 |
If you contribute to an HSA, you cannot also fund a general-purpose health FSA. You can pair an HSA with a limited-purpose FSA, which covers dental and vision expenses only. The limited-purpose FSA uses the same contribution cap as the general health FSA, so its projected 2027 limit is also $3,500.
Dependent Care FSA in 2027: Likely Flat at $7,500
The dependent care FSA (also called a DCAP or DCFSA) works differently. Its cap is written directly into Internal Revenue Code Section 129 as a fixed dollar amount, and it is not automatically indexed to inflation.
The One Big Beautiful Bill Act raised that cap from $5,000 to $7,500 (and from $2,500 to $3,750 for married taxpayers filing separately) effective for plan years beginning January 1, 2026. That was the first increase since 1986. Because the statute does not include an inflation adjustment, the dependent care FSA limit is expected to stay at $7,500 for 2027 and beyond until Congress changes it again.
Two things to know if you use a dependent care FSA:
- Your election does not roll up automatically. Employees who elected $5,000 before the increase had to actively change their election at open enrollment to reach $7,500.
- There is no carryover. The carryover rule applies to health FSAs only. Dependent care FSA funds are strict use-it-or-lose-it, subject to any grace period your plan offers.
Health FSA vs HSA vs Dependent Care FSA: 2027 Comparison
| Feature | Health FSA | HSA | Dependent Care FSA |
|---|
| 2027 limit | $3,500 (projected) | $4,500 self / $9,000 family (official) | $7,500 (expected, statutory) |
| Requires a high-deductible plan | No | Yes | No |
| Funds roll over | Up to $700 projected carryover, or a grace period | Yes, unlimited, forever | No |
| Owned by | Employer plan | You | Employer plan |
| Survives job change | No | Yes | No |
| Available in full on day one | Yes, entire election | No, only what has been deposited | No, only what has been deposited |
| Covers | Medical, dental, vision, Rx | Medical, dental, vision, Rx | Childcare, daycare, after-school, some elder care |
The full-year-upfront rule is the health FSA's biggest advantage. If you elect $3,500 and have a $3,000 medical bill in January, you can use the full amount immediately even though only a fraction has been withheld from your paychecks.
Carryover or Grace Period, Not Both
Your employer can offer one of the following, or neither, but never both:
- Carryover: unused health FSA money up to the annual carryover limit (a projected $700 for 2027) moves into the next plan year and stays available for the full year.
- Grace period: you get up to 2.5 extra months after the plan year ends (typically through March 15) to incur new expenses against the leftover balance.
- Run-out period: a separate deadline, usually 60 to 90 days, to submit claims for expenses you already incurred during the plan year. Most plans have one regardless of carryover or grace period status.
Check your plan document. Employers are also free to set a health FSA cap below the IRS maximum, so your workplace may cap you at $2,500 even when the IRS ceiling is $3,500.
How to Plan Your 2027 FSA Election
- Wait for the October or November IRS announcement if you can. Open enrollment for a January 1, 2027 plan year usually runs from late October through November, which is typically after the IRS releases the official number. If your election window opens earlier, plan around the $3,500 projection and confirm with your benefits administrator.
- Add up predictable expenses. Recurring prescriptions, planned dental work, orthodontics, contacts or glasses, therapy copays, and any scheduled procedure. These are the safest dollars to pre-fund.
- Subtract what an HSA would cover better. If you are on a high-deductible plan and eligible for an HSA, prioritize the HSA. It rolls over forever and follows you when you change jobs.
- Do not fund more than carryover protects. If your plan offers the projected $700 carryover, the amount you could realistically lose is limited to whatever exceeds it. If your plan offers nothing, forfeited money is gone.
- Confirm your dependent care election. If you use the dependent care FSA and are still at the old $5,000 election, you may be leaving $2,500 in pre-tax room unused.
When the Official 2027 Numbers Arrive
The IRS typically publishes the annual inflation-adjusted benefit limits, including the health FSA cap and carryover, in a revenue procedure released in October or November. Revenue Procedure 2025-32 set the 2026 numbers and came out on October 9, 2025. Expect the 2027 equivalent on a similar schedule in fall 2026.
Retirement plan limits (401(k), IRA) are usually announced separately, around the same time, in a different IRS notice. HSA and HDHP limits, as noted, come much earlier, in the spring.
Until the official release, treat $3,500 and $700 as strong estimates, not settled law.
Frequently Asked Questions
What is the projected FSA contribution limit for 2027?
The projected 2027 health FSA contribution limit is $3,500, up $100 from the official 2026 limit of $3,400. The projected carryover limit is $700, up from $680. These are unofficial projections based on the IRS inflation-adjustment formula and published Chained CPI data.
Is the 2027 FSA limit official yet?
No. The IRS has not published the official 2027 health FSA limit as of July 2026. It is expected in October or November 2026. The official 2027 HSA and HDHP limits, by contrast, were already released in Revenue Procedure 2026-24 in May 2026.
How accurate are FSA limit projections?
Very accurate. The health FSA limit follows a formula written into the tax code using Chained CPI data that is mostly public by mid-summer. Firms like Mercer only need to estimate two months of data. Projections published in June have consistently matched the IRS announcement.
What is the dependent care FSA limit for 2027?
It is expected to remain $7,500 ($3,750 for married filing separately). Congress raised the cap from $5,000 effective in 2026, and the statute does not index it to inflation, so it should stay flat until Congress changes it again.
Can I have an FSA and an HSA at the same time?
Not a general-purpose health FSA. If you contribute to an HSA, you can only pair it with a limited-purpose FSA (dental and vision) or a post-deductible FSA. A dependent care FSA is always compatible with an HSA because it covers childcare, not medical care.
What happens to FSA money I do not spend?
It depends on your plan. If your employer offers carryover, up to a projected $700 rolls into the next plan year for 2027. If your employer offers a grace period instead, you get about 2.5 extra months to spend it. If neither, unspent funds are forfeited to the plan.
Does the 2027 FSA limit apply to my plan year or the calendar year?
The limit applies to plan years beginning in 2027. If your employer runs a non-calendar plan year, for example July 1 to June 30, the 2027 limit applies to the plan year that starts in 2027, not to calendar-year spending.
