Contribution Limit (HSA / FSA)

The contribution limit is the maximum annual amount the IRS allows a taxpayer to deposit into a specific tax-advantaged account, including Health Savings Accounts (HSAs), Health Flexible Spending Accounts (health FSAs), and Dependent Care FSAs (DCFSAs). The limits are set annually and indexed to inflation, and exceeding them creates tax penalties and complex reporting corrections.

For 2024, the HSA contribution limit is $4,150 for self-only HDHP coverage and $8,300 for family HDHP coverage, with a $1,000 catch-up contribution allowed for taxpayers age 55 and older. Health FSA contribution limits are $3,200 for 2024 with an optional $640 carryover to the following year (employer-plan dependent). Dependent Care FSA contributions are capped at $5,000 per household (or $2,500 if married filing separately), a limit that hasn't kept pace with actual childcare costs and is one of the most-cited candidates for congressional reform. The IRS updates these limits each spring for the following tax year, and employers must update payroll systems, enrollment platforms, and communication materials accordingly. HSA contributions can be made by the employer, employee (via payroll deduction pre-tax), or after-tax (with an above-the-line deduction on the tax return); FSA and DCFSA contributions must go through payroll to preserve pre-tax status.

The takeaway: if you're eligible for an HSA and have the cash flow, max out the annual contribution — it's one of the most tax-advantaged account structures available in the U.S. tax code (triple tax advantage: pre-tax in, tax-free growth, tax-free out for medical). For an FSA, be conservative because unused amounts above the carryover limit are forfeited.