The Washington Report

October 15, 2025

While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Other HR/Employment

 

IRS Provides Tax Inflation Adjustments for 2026
On October 9, 2025, the Internal Revenue Service (IRS) announced in Revenue Procedure 2025-32 the tax year 2026 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2025-32 provides details about all these annual adjustments. Items that may be of interest to employers are provided below. Please refer to the actual Revenue Procedure for all tax information. 

Qualified Transportation Fringe Benefit: For tax year 2026, the monthly limitation for the qualified transportation fringe benefit is $340, as is the monthly limitation for qualified parking. This amount increased $15 from the tax year 2025 benefit of $325.

Health Flexible Spending Arrangements: For the taxable years beginning in 2026, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $3,400, an increase of $100 from the 2025 tax benefit of $3,300. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $680, an increase of $20 from taxable years beginning in 2025.

Medical Savings Accounts: For tax year 2026, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,900, up $50 from tax year 2025; but not more than $4,400, an increase of $100 from tax year 2025. For self-only coverage, the maximum out-of-pocket expense amount is $5,850 up $150 from 2025. For tax year 2026, participants with family coverage, the floor for the annual deductible is $5,850, up from $5,700 in 2025; however, the deductible cannot be more than $8,750, up $200 from the limit for tax year 2025. For family coverage, the out-of-pocket expense limit is $10,700 for tax year 2026, an increase of $200 from tax year 2025.

Qualified Adoption Expenses: The maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $17,670 for taxable years beginning in 2026, up from $17,280 for 2025.

For more information, see the Aon bulletin entitled IRS Issues 2026 Benefit Contribution Limits, in the Publications section of this newsletter.

Information Release 2025-103 is available here.

IRS Revenue Procedure 2025-32 is available here.

Aon Publications

 

IRS Issues 2026 Benefit Contribution Limits
On October 9, 2025, the Internal Revenue Service (IRS) issued Revenue Procedure 2025-32, updating the indexed limitations for certain employee benefit programs.

The Aon bulletin is available here.

ACIP Issues New Vaccine Recommendations — What Plan Sponsors Need to Know
The Centers for Disease Control and Prevention’s (CDC’s) Advisory Committee on Immunization Practices (ACIP) voted 12–0 to recommend COVID-19 vaccines be administered based on shared clinical decision-making (also known as “individual-based decision-making”) rather than universally recommending the vaccine for all. The Affordable Care Act still requires vaccines that are based on shared clinical decision-making to be covered by non-grandfathered group health plans without participant cost-sharing.

Plans may, but are not required to, stop covering the combined Measles, Mumps, Rubella, and Varicella vaccine without cost-sharing for children under the age of four after the end of the current plan year. Plans must continue covering the combined vaccine at 100 percent for children four years old and older if parents prefer the combined vaccine.

The new recommendations have been accepted by the acting Director of the CDC and while they must still be covered by group health plans without cost-sharing, these updated recommendations could impact access to, and potentially insurance coverage for, COVID-19 vaccines-related services. 

The Aon bulletin is available here.