---
title: IRS Announces 2027 COLAs for Transportation Fringes, FSA Deferrals
description: IRS announces 2027 COLAs for transportation fringes and FSA deferrals.
---

[Pay News Now](https://blogs.payroll.org/pay-news-now)

# [IRS Announces 2027 COLAs for Transportation Fringes, FSA Deferrals](https://blogs.payroll.org/pay-news-now/irs-announces-2027-colas-for-transportation-fringes-fsa-deferrals)

 Written by [Rayna Alexander, Esq.](https://blogs.payroll.org/pay-news-now/author/rayna-alexander-esq) | Nov 6, 2026, 3:35:46 PM

The IRS released cost-of-living-adjustments (COLAs) for 2027 reflecting any increases in excludable transportation fringes and the flexible spending arrangement (FSA) deferral limit, among other changes \[[Rev. Proc. 2026-35](https://payroll.org/docs/default-source/irs-and-ssa-announcements/26m06-Rev-Proc-2026-35-110526.pdf), 11-5-26\].

For 2027, the amounts that may be excluded from gross income for employer-provided qualified transportation fringe benefits and qualified parking increase to $350 per month ($340 in 2026).

For plan years beginning in 2027, the dollar limitation for voluntary employee salary reductions for contributions to health FSAs increases to $3,500 ($3,400 in 2026). For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount increases to $700 ($680 in 2026).

The Revenue Procedure also addresses changes made by Public Law 119-21, known as the [One Big Beautiful Bill Act](https://payroll.org/compliance/compliance-overview/hot-topics/one-big-beautiful-bill-act).

**For More Information**

Complete coverage of the announced changes is available in *Payroll Currently* ([Issue 11](https://bookshelf.payroll.org/pc2611), Vol. 34, 11-6-26).

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out [Payroll Source Plus](https://store.payroll.org/subscription-listing/a2VPn000004KjJsMAK/sl000023)!

*Rayna Alexander, Esq., is Editor of Payroll Information Resources for PayrollOrg.*

[View full post](https://blogs.payroll.org/pay-news-now/irs-announces-2027-colas-for-transportation-fringes-fsa-deferrals)

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