2026 payroll and benefits compliance made easy with Baker Tilly Advantage

As businesses prepare for the new year, payroll and benefits compliance remain a critical priority. Each year, the Internal Revenue Service (IRS) and other regulatory bodies adjust contribution limits that impact social security, retirement plans, Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), Adoption Assistance, High Deductible Health Plans (HDHPs) and commuter benefits. Missing these adjustments can lead to costly errors, compliance risks and frustrated employees.

For human resources (HR) and finance leaders, staying on top of these changes isn’t just about accuracy; it’s about creating a seamless experience for your workforce while protecting your organization from penalties. We’ve highlighted the key limits for 2026 you need to be aware of, and how Baker Tilly Advantage can simplify the process for you.

Social security wage base

• The social security wage limit will increase to $183,600, up $7,500 from 2025
• The maximum social security tax for employees and employers will be $11,383.20
• Medicare rates remain at 1.45% with no wage cap / the additional 0.9% tax applies for high earners (over $200,000 filing single, $250 for joint filing)

Retirement plan contribution limits

• 401(k), 403(b), and 457 plans: Employee contribution limits are projected to increase by $1,000 to $24,500.
• Catch-up contributions for employees over the age of 50 will increase to $8,000
• Under Secure 2.0, employees aged 60-63 may qualify for an additional “super” catch-up of $11,250
• Combined employee and employer contributions could reach $72,000

Health Savings Account (HSA) limits

• Individual coverage limit increases to $4,400
• Family coverage limit increases to $8,750
• Catch-up contributions for those ages 55+ remain at $1,000

Flexible Spending Accounts (FSA) limits

• Health Care FSA limits increase to $3,400, up $100 from 2025
• HCFSA rollover limit increases to $680, up $20 from 2025
• Dependent Care FSA limit increases to $7,500 for single individuals and married couples filing jointly. The limit for married couples filing separately is $3,750)

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) limits

• Individual coverage limit increases to $6,450, up $100 from 2025
• Family coverage limit increases to $13,100, up $300 from 2025

Adoption assistance

The maximum amount that may be excluded from an employee’s gross income for the adoption of a special needs child through an adoption assistance program is $17,670, up $390 from 2025.

High Deductible Health Plan (HDHP) amounts/limits

The tables below contain the HDHP amounts/limits for 2025 and 2026, for individuals and families.

Commuter benefits limit

Pre-tax monthly contribution limits will rise to $340 for both transit and parking.

Simplify complexity with Baker Tilly Advantage

Keeping up with payroll compliance and benefit changes can be overwhelming. Baker Tilly Advantage provides comprehensive payroll and compliance support to help organizations stay aligned with IRS requirements. We continuously monitor contribution limits, manage payroll tax calculations and ensure accurate tracking and reporting to reduce the risk of errors and penalties. Our solution integrates seamlessly with your payroll systems, applying limits correctly across benefits programs for hassle-free administration. We provide you with the opportunity to centralize core administrative support functions under one “roof”.

What you will gain:

• Scalable services that adapt as your business evolves
• Trusted compliance expertise across federal, state and local regulations
• More time for strategy, less time on administrative tasks

With Baker Tilly Advantage, you can confidently delegate your back-office operations, freeing your team to focus on growth and innovation. Connect with our experienced HR and payroll practitioners for additional information and guidance.