Employee Benefits-Related Limits for 2025

Brownstein Client Alert, Nov. 11, 2024

This chart shows some of the annually adjusted dollar limits that impact employee benefits, as published by the Internal Revenue Service, the Social Security Administration and the Pension Benefit Guaranty Corporation.

ADJUSTED ITEM	2025	2024	Notes
Elective Deferrals (Pre-Tax and Roth) 401(k), 403(b), 457(b) plans (IRC §§402(g)(1) and 457(e)(15))	$23,500	$23,000	(a)
Catch-up Contributions 401(k), 403(b), governmental 457(b) plans (IRC §§414(v)(2)(B)(i)) Catch-up if age 60, 61, 62 or 63 by calendar year end (IRC §414(v)(2)(E)(i)) Roth catch-up wage threshold (IRC §414(v)(7)(A))	$7,500 $11,250 $145,000	$7,500 n/a n/a	(a)
Emergency Savings Accounts (IRC §402A(e)(3)(A)(i)) Eligible Distributions to Victims of Domestic Abuse (IRC §72(t)(2)(K)(ii)(I))	$2,500 $10,300	$2,500 $10,000	(a)
Annual Compensation Limit Generally (IRC §§401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)) Certain governmental plans in effect on July 1, 1993	$350,000 $520,000	$345,000 $505,000	(b)
Annual Additions Defined contribution plan (IRC §415(c)(1)(A)) (also applies to SEPs) Defined benefit plan (IRC §415(b)(1)(A))	$70,000 $280,000	$69,000 $275,000	(c) (b)
Highly Compensated Employee (IRC §414(q)(1)(B))	$160,000	$155,000	(b)
Key Employee Officer for Top-Heavy Plans (IRC §416(i)(1)(A)(i))	$230,000	$220,000	(b)
PBGC Guaranteed Benefit (monthly straight life annuity at age 65; rounded)	$7,432	$7,108	(d)
Tax Credit ESOP (IRC §409(o)(1)(C)) 5-year maximum balance Additional 1 year limit	$1,415,000 $280,000	$1,380,000 $275,000	(b)
Starter 401(k) Deferral Only and 403(b) Safe Harbor Deferral Only Elective contributions ((IRC §§401(k)(16)(B) and 403(b)(16)(B)) Additional elective contributions if over age 50	$6,000 $1,000	$6,000 $1,000	(aa)
SEP (IRC §408(k)) Minimum compensation (for coverage) (IRC §408(k)(2)(C)) Maximum compensation (IRC §408(k)(3)(C))	$750 $350,000	$750 $345,000	(e) (b)
SIMPLE 401(k) and SIMPLE IRA (IRC §408(p)) Elective contribution limit (IRC §408(p)(2)(E)(i)(III)) Catch-up limit (IRC §§414(v)(2)(B)(ii)) Catch-up if age 60, 61, 62 or 63 by calendar year end	$16,500 $3,500 $5,250	$16,000 $3,500 n/a	(a)
Health Savings Accounts (HSAs) (IRC §§223(b) and (c)) Maximum annual HSA contribution Self-only coverage Family coverage Age 55+ additional HSA contribution (maximum) HDHP minimum annual deductible (amount cannot be less to have an HSA) Self-only coverage (not less than) Family coverage (not less than) HDHP maximum annual out-of-pocket expense (cannot exceed to have HSA) Self-only coverage Family coverage Excise tax for non-medical distributions from HSA	$4,300 $8,550 $1,000 $1,650 $3,300 $8,300 $16,600 20%	$4,150 $8,300 $1,000 $1,600 $3,200 $8,050 $16,100 20%	(f)
Health FSA Maximum Annual Contribution (IRC §125(i)) Maximum carryover of unused amounts	$3,300 $660	$3,200 $640	(e)
Qualified Small Employer Health Reimbursement Account (QSEHRA) (IRC §9831)) Maximum employer contribution for individual coverage Maximum employer contribution for family coverage	$6,350 $12,480	$6,150 $12,450	(g)
Excepted Benefit HRA Maximum Annual Amount (26 CFR §54.9831-1(c)(3)(viii))	$2,150	$2,100	(gg)
Qualified Transportation Fringe Benefit (IRC §132(f)(2)) Employer-provided parking (monthly) Mass transit pass and van pool (monthly) Bicycle commuting (monthly)	$325 $325 —	$315 $315 —	(h) (hh) (hhh)
Dependent Care Assistance Maximum gross income exclusion (IRC §129(a)(2)(A))	$5,000	$5,000	(i)
Adoption Assistance Programs (IRC §137(a)(2)) Dollar limit on benefits excludable from gross income (IRC §137(b)(1)) Phase-out gross income threshold (IRC §137(b)(2)) Floor Ceiling	$17,280 $259,190 $299,190	$16,810 $252,150 $292,150	(j)
Long-Term Care Premiums as medical care expenses (IRC §213(d)(10)) Taxpayer age 40 and younger Taxpayer over age 40 but not more than age 50 Taxpayer over age 50 but not more than age 60 Taxpayer over age 60 but not more than age 70 Taxpayer over age 70	$480 $900 $1,800 $4,810 $6,020	$470 $880 $1,760 $4,710 $5,880	(k)
Social Security OASDI Taxable Wage Base	$176,100	$168,600	(l)

(a) Indexed in $500 increments. (b) Indexed in $5,000 increments. (c) Indexed in $1,000 increments.

(aa) Starter 401(k) plan: Effective Jan. 1, 2024; employers cannot contribute; autoenrollment range 3% to 15%; no nondiscrimination testing.

(d) See, https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee. For multiemployer plans, PBGC guarantees a maximum monthly payment based on a formula = (100% of first $11 of monthly benefit rate + 75% of next $33 of monthly benefit rate) x years of credited service. The guaranteed monthly benefit is limited to $35.75/month x years of credited service and disregards any benefit amount greater than $44/month. This formula has been in place since 2001 and is not adjusted for inflation or COLA. See, https://www.pbgc.gov/prac/multiemployer/multiemployer-benefit-guarantees.

(e) Indexed in $50 increments.

(f) Indexed in $50 increments. IRC §223(g). See Rev. Proc. 2024-25 (May 2024), available at https://www.irs.gov/pub/irs-drop/rp-24-25.pdf.

(g) Indexed in $50 increments. The 21st Century Cures Act, Pub. L. 114-255 (Dec. 13, 2016), beginning Jan. 2017 amended IRC §9831, ERISA §733, and PHSA §2791 to create QSEHRAs, which allow employer payment plans without creating group health plans. Available for employers with fewer than 50 FT employees or equivalents.

(gg) Indexed in $50 increments. Under 26 CFR §54.9831-1(c)(3), certain group health plans qualify as limited excepted benefits not subject to the requirements of IRC Chapter 100. See Rev. Proc. 2024-25 at https://www.irs.gov/pub/irs-drop/rp-24-25.pdf (May 2024).

(h) Indexed in $5 increments. IRC §132(f).

(hh) Section 105 of the Consolidated Appropriations Act of 2016, Pub. L. 114-113, created parity after Dec. 31, 2014, between (i) the transit benefit exclusion for the aggregate of transportation in a commuter highway vehicle and any transit pass and (ii) the exclusion for qualified parking. IRS Notice 2016-6, https://www.irs.gov/pub/irs-drop/n-16-06.pdf.

(hhh) IRC §132(f), as amended by §211(a) of Division B of the Emergency Economic Stabilization Act of 2008. Cannot receive bicycle benefit in any month in which any other qualified transportation fringe benefit is received. The Tax Cuts and Jobs Act of 2017 (“TCJA”) removed qualified bicycle commuting reimbursements from the definition of “qualified transportation fringe” for years beginning after 2017 and before 2026; thus, these benefits are taxable to employees during this 8year period, although the employer can take a deduction. The TCJA also provides that no employer tax deduction is allowed for qualified transportation benefits (whether provided directly by an employer, or through a bona fide reimbursement arrangement or a compensation reduction agreement) incurred or paid after 2017, with the exception of transportation for employee safety and qualified bicycle commuting benefits. Although employers may no longer take a deduction for their payments for these qualified transportation benefits, the fringe benefit exclusion rules still apply and the employer payments may be excluded from employees’ wages. In 2017, prior to TCJA, the bicycle amount was $20 per month, up to $240 per year.

(i) $2,500 if married filing separate return. Amount fixed by statute, not currently adjusted for inflation. See, IRC §129(a)(2)(A). Section 9632 of the American Rescue Plan Act of 2021 (“ARPA”) temporarily increased the dollar limit to $10,500 for the period after Dec. 31, 2020, and before Jan. 1, 2022 (50% of this amount in the case of married filing separate return); See also Notice 2021-26: increase does not apply to non-calendar year plans.

(j) Indexed in $10 increments. IRC §137(f). Revised by Rev. Proc. 2018-18, IRB 2018-18 (Mar. 5, 2018).

(k) Indexed in $10 increments. IRC §213(d)(10)(B). Based on taxpayer’s age before the close of the tax year.

(l) Indexed in $300 increments. For 2025, the FICA tax rate is 7.65% for employees and 15.30% for self-employed. The maximum 2025 OASDI portion of FICA tax payable by each employee is 6.2% of the applicable wage base. Employer contribution amount matches the employee amount. These percentages are set by statute. There is no wage base limit for the Medicare (HI) portion of FICA taxes, thus all wages earned are subject to the HI tax, which also is paid by employers and employees (each pays at a 1.45% rate, and self-employed pay 2.9%), although employees pay an additional 0.9% on wages greater than $200,000 ($250,000 for married, filing jointly). The OASDI tax rate for self-employment income is 12.4%. See https://www.ssa.gov/oact/cola/cbb.html.

See: IRS Notice 2024-80, “2025 Limitations Adjusted As Provided in Section 415(d), etc.”, found at https://www.irs.gov/pub/irs-drop/n-24-80.pdf (Nov. 1, 2024) (includes IRA information), and Rev. Proc. 2024-40 found at https://www.irs.gov/pub/irs-drop/rp-24-40.pdf (Oct. 22, 2024) (includes adjustments for return failure penalties).

This document is intended to provide you with general information regarding employee benefits issues. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to issues, please contact the attorneys listed or listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed. This communication may be considered advertising in some jurisdictions.