US sets higher employee-benefit limits for 2027

Three employer-plan limits

The annual salary-reduction limit for a health flexible spending arrangement under a cafeteria plan rises to USD3,500. Where the plan permits unused amounts to be carried over, the maximum carryover rises to USD700. The exclusion for employer-provided educational assistance under section 127 rises to USD5,400. For qualified transportation fringes, the monthly exclusion is USD350 for the combined commuter-highway-vehicle and transit-pass category and a separate USD350 for qualified parking; the monthly figures are not annual caps.^[1][2]

Existing statutory conditions still matter

Revenue Procedure 2026-35 adjusts monetary amounts rather than replacing the underlying eligibility rules. Section 127 requires a separate written educational-assistance plan and contains nondiscrimination, owner-benefit and employee-notification conditions. It covers qualifying education expenses and specified education-loan payments, subject to statutory exclusions. Section 132(f) defines the qualifying transportation categories and monthly limits. Employers should therefore update plan and payroll parameters without assuming that every reimbursement becomes tax-free merely because it is below the revised amount.^[2][3][4]

Payroll and enrolment action for US employers

US employers in multinational groups should align 2027 enrolment materials, salary-reduction elections, payroll deductions, educational-assistance limits and transport-benefit settings with the new amounts. Where a plan uses an FSA carryover, the plan administrator should confirm that the option is actually included and that the correct plan-year settings apply. The procedure does not authorise retrospective changes to 2026 elections or dispense with plan-specific eligibility and documentation requirements.^[1][2][3][4]

No new return deadline

The procedure generally applies to taxable years beginning in 2027. It does not create a new employer information return or change a corporate return deadline. The practical impact is prospective payroll and benefits administration. The same revenue procedure also contains many unrelated 2027 adjustments already covered separately by Straxiom; this focused brief does not claim to be an overview of the whole instrument. Further legislation or IRS guidance could change the 2027 position and should be monitored.^[1][2]