IRS Reminder: Maximize Your Health Savings with FSA in 2025

As the 2025 tax year approaches, the IRS reminds employees to take full advantage of Flexible Spending Accounts (FSAs) during open enrollment. FSAs allow employees to set aside tax-free money through payroll deductions to cover eligible medical expenses not covered by insurance. For 2025, the contribution limit is $3,300 per person, which is exempt from federal income tax, Social Security, and Medicare taxes. 

If the employer allows, they may also contribute to the employee's FSA. Additionally, if an employee's spouse has access to a plan through their employer, they may contribute up to $3,300 to their own FSA, meaning a couple could contribute up to $6,600 in total. 

The IRS also increased the rollover amount for unused funds in 2025 to $660, up from $640 in 2024. This rollover provision is important for those who may not use all their FSA funds by the end of the year. 

Employees should review their medical expenses and plan for the upcoming year. FSAs cover a wide variety of health expenses, from prescription medications and co-pays to dental and vision care. It's crucial to estimate your potential healthcare costs for the year and make a thoughtful contribution to maximize your savings. 

Remember, self-employed individuals are not eligible for FSAs. For employees working at companies that offer FSAs, this is an excellent opportunity to lower your taxable income and save money on medical costs. 

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