IRS 2023 Benefit Limits
By Candace Fisher, SPHR, Director, Organizational Development/Certified Coach
Published December 20, 2022
The Internal Revenue Service (IRS) has announced 2023 benefit limits. Some maximums have increased considerably over 2022, so members should be aware of the following:
- The contribution limit for 401(k), 403(b), and most 457 plans is increased to $22,500, up from $20,500.
- The annual “catch-up” contribution for employees over age 50 is increased to $7,500 from $6,500.
- The Health Care FSA (Flexible Spending Account) contribution limit is rising to $3,050 (up from $2,850 in 2022). Remember that employers are always allowed to set the maximum an employee can put aside at a rate lower than this amount.
- The maximum rollover amount (if allowed by the plan) will be $610 for 2023, up from $570 in 2022.
- Dependent Care FSA limits remain at $5,000.
- High Deductible Health Plan (HDHP). For calendar year 2023, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,850 (up from $3,650); the annual limitation for an individual with family coverage under a high deductible health plan is $7,750 (up from $7,300). HSA catch-up contributions (for age 55 and older) remain at $1,000.
In 2023, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,500 for self-only coverage or $3,000 for family coverage (up from $1,400 and $2,800 respectively), and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,500 for self-only coverage or $15,000 for family coverage (up from $7,050 and $14,100).
- Qualified Transportation Benefits. For 2023, the monthly limit on the amount that may be excluded from an employee’s income for qualified parking benefits will be $300 (up from $280 in 2022). The combined monthly limit for transit passes and vanpooling expenses for 2023 will be $300 (up from $280 in 2022).
- A new IRS standard mileage rate for 2023 has not been announced, although, in a rare move, the rate was increased mid-year in 2022 to 62.5 cents per mile.
HR Source members with questions should contact us through the HR Hotline online or at 800-448-4584.