IRS Releases 2023 Inflation-Adjusted Amounts for Health and Welfare Benefits
The IRS has issued Revenue Procedure 2022-38, which contains cost-of-living adjustments for taxable years beginning in 2023 for over 60 tax provisions, including the following health and welfare benefits.
The dollar limitation under Internal Revenue Code Section (IRC Sec.) 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $3,050, up from $2,850 for 2022. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $610, up from $570 for 2022.
Qualified Transportation Fringe Benefit
The monthly limitation under IRC Sec. 132(f)(2)(A) for the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $300, up from $280 for 2022. The monthly limitation under IRC Sec. 132(f)(2)(B) for the fringe benefit exclusion amount for qualified parting is $300, up from $280 for 2022.
Qualified Small Employer Health Reimbursement Arrangement
To qualify as a qualified small employer health reimbursement arrangement under IRC Sec. 9831(d), the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,850 or $11,800 for family coverage, up from $5,450 or $11,050 for family coverage for 2022.
For additional information on the 2023 inflation-adjusted limits for other tax provisions, see Rev. Proc. 2022-38.