2025 Contribution Limits: Retirement, FSA, HSA, and Commuter Benefits
Quick look: A new year is quickly approaching, and with it comes a new set of contribution limits for retirement accounts, health savings accounts, flexible savings accounts, and commuter benefits plans. Employers and their staff should review these new figures set by the IRS and adapt their 2025 benefits plans accordingly.
2025 is almost here, and so are the Internal Revenue Service’s (IRS) new contribution limits for retirement accounts, health savings accounts, flexible savings accounts, and commuter benefit plans.
While the inflation rate has cooled year-over-year—2.6% this October compared to 3.2% in October 2023—financial pressures remain for many Americans. Bank of America’s latest annual Workplace Benefits Report revealed that just 47% of U.S. employees rate their financial wellness as good or excellent. Further, the report found that 66% feel stressed about their finances, and 76% are concerned that the cost of living could outpace their income.
The following contribution limit updates take effect January 1, 2025, and will enable employees to save additional funds for their retirement years, more affordably tend to their health, and save on their work commutes.
2025 retirement contribution limits
The IRS has announced that the contribution limit for workers who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will increase from $23,000 up to $23,500.
The annual contribution limit for IRAs will remain at $7,000, the same amount as in 2024. The IRA catch‑up contribution limit for employees aged 50 and up will remain at $1,000 (a figure amended under the SECURE 2.0 Act to adjust for the cost of living).
The catch-up contribution limit for individuals aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will remain $7,500 in 2025. This brings the annual total that participants in these plans can contribute to $31,000 starting in 2025. The catch-up contribution limit for employees aged 50 and over participating in most SIMPLE plans will stay $3,500 in 2025.
The eligible income ranges will increase in 2025 for making deductible contributions to traditional IRAs, contributing to Roth IRAs, and claiming the Saver’s Credit.
Per the IRS, “Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)”
Below are the 2025 phase-out ranges for traditional IRAs:
- Single taxpayers covered by a workplace retirement plan: The phase-out range will increase to between $79,000 and $89,000 (up from between $77,000 and $87,000).
- Married couples filing jointly: If the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range will rise to between $126,000 and $146,000 (up from between $123,000 and $143,000).
- IRA contributors who aren’t covered by a workplace retirement plan and are married to someone who is covered: The phase-out range will jump to between $236,000 and $246,000 (up from between $230,000 and $240,000).
- Married individuals filing separately who are covered by a workplace retirement plan: The phase-out range isn’t subject to an annual cost-of-living adjustment and will remain between $0 and $10,000.
For Roth IRAs, the following phase-out ranges will apply:
- Singles or heads of household who contribute to a Roth IRA: The phase-out range will grow to between $150,000 and $165,000 (up from between $146,000 and $161,000).
- Married couples filing jointly: The income phase-out range will increase to between $236,000 and $246,000 (up from between $230,000 and $240,000).
- Married individuals filing separately who contribute to a Roth IRA: The phase-out range isn’t subject to an annual cost-of-living adjustment and will remain between $0 and $10,000.
Below are the income limits for the Saver’s Credit (aka the Retirement Savings Contribution Credit) for low- and moderate-income workers:
- Married filing jointly: $79,000, up from $76,500.
- Heads of household: $59,250, up from $57,375.
- Singles and married individuals filing separately: $39,500, up from $38,250.
Additionally, the amount individuals can contribute to their SIMPLE retirement accounts will rise to $16,500, up from $16,000.
These climbing limits should allow workers to continue to boost their retirement savings rates, something that’s already on the rise; reports show that during the second quarter of 2024, nearly 50 million 401(k) account balances reached the third-highest levels on record.
2025 FSA contribution limits
FSAs will also experience increased contribution limits next year. These accounts can help lower medical and/or dependent care expenses, pay for deductibles, co-pays, and coinsurance, and preschool, day camp, or after-school programs.
In 2025, workers can add an extra $100 to their FSAs as the annual contribution limit rises to $3,300 (up from $3,200). If the FSA plan allows unused FSA amounts to carry over, employees can carry over up to $660 (up from $640).
Read IRS Revenue Procedure 2024-40 >
2025 HSA contribution limits
Workers enrolled in a qualified high-deductible health plan (HDHP) are eligible to defer funds into an HSA. These accounts allow employees to set aside pre-tax money from their paychecks to help pay for eligible medical, dental, or vision expenses not covered by their health plans.
In 2025, an HDHP must have a deductible of at least $1,650 for self-only coverage or $3,300 for family coverage. Additionally, annual out-of-pocket expense maximums can’t exceed $8,300 for self-only coverage or $16,600 for family coverage.
The limit for self-only HSA coverage will be $4,300; for family coverage, the limit will be $8,550. Those aged 55 and up will be able to contribute an extra $1,000 to their HSAs.
The IRS also announced the maximum amount employers can contribute to an excepted-benefit health reimbursement arrangement (HRA) in 2025 will be $2,150 (up from $2,100 in 2024).
Read IRS Revenue Procedure 2024-25 >
| 2025 | 2024 | Change | |
|---|---|---|---|
| HSA contribution limit (employer + employee) | Self-only: $4,300 Family: $8,550 | Self-only: $4,150 Family: $8,300 | Self-only: +$150 Family: +$250 |
| HSA catch-up contributions (age 55 or older) | $1,000 | $1,000 | No change (set by statute) |
| HDHP minimum deductibles | Self-only: $1,650 Family: $3,300 | Self-only: $1,600 Family: $3,200 | Self-only: +$50 Family: +$100 |
| HDHP maximum out-of-pocket amounts (deductibles, co-payments, and other amounts, but not premiums) | Self-only: $8,300 Family: $16,600 | Self-only: $8,0500 Family: $16,100 | Self-only: +$250 Family: +$500 |
2025 commuter benefits limits
Commuter benefits, aka qualified transportation fringe benefits, can help employees reduce expenses incurred while commuting to and from work. Workers may contribute to their commuter benefits plans (CBPs) on a pre-tax basis and use the funds to pay for eligible mass transit or parking expenses.
In 2025, employees can contribute $325 per month to their CBP, up from $315 in tax year 2024.
Read IRS Revenue Procedure 2024-40 >
PEOs: for benefits administration, planning, and expertise
Many employers are turning to financial wellness benefits like the ones mentioned above to help employees strengthen their fiscal standing—the financial wellness benefits market is expected to reach $7 billion by 2032.
Whether your business already offers these plans or is looking to implement them, a professional employer organization (PEO) can help you provide your staff with competitive benefits packages and informational guidance, all while simplifying your organization’s operations. After all, it’s recommended to update your benefit programs, educate your employees on plan changes, and more each year as limits change.
ExtensisHR, a nationally recognized PEO, has a benefits administration and management team that keeps you informed on the latest benefits updates and trends and provides access to competitive, Fortune 500-level plans, including:
- Medical, dental, and vision insurance with FSA and HSA options
- 401(k) retirement plans
- Life insurance and long-term care insurance
- Commuter benefit plans
- 529 financial plans
- Supplemental health insurance, including accident, critical illness, and hospital indemnity insurance
- Pet insurance
- Family-forming support
- And more
At ExtensisHR, we believe knowledge is power and offer access to various financial wellness training sessions on budgeting, investing, retirement planning, and more.
Do you want to learn more about how a PEO can help your employees make the most of their hard-earned wages? Learn more about ExtensisHR’s benefits solutions, or contact our experts today.
