COLA 2025: Cost-of-Living Adjustments

TRI-AD presents the Cost-of-Living Adjustments (COLAs) for 2025. These limits are provided each year by the Internal Revenue Service and are effective as of January 1, 2025.

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Retirement Cost-of-Living Adjustments
Maximum Dollar Limitations

Employee Deferral Limits

2025

 2024 2023 2022

2021
401(k) Contribution $23,500 23,000 22,500 20,500 19,500
403(b) Contribution $23,500

23,000

22,500

 20,500 19,500

457 Contribution

$23,500

 23,000 22,500 20,500 19,500

SIMPLE 401(k)/IRA

 $16,500 16,000 15,500 14,000 13,500
Employee Catch-Up Limits

401(k), 403(b), 457

 $7,500 7,500 7,500 6,500 6,500

SIMPLE 401(k)/IRA

 $3,500 3,500 3,000 3,000 3,000

Enhanced (for those ages 60-63)*

 $11,250 N/A N/A N/A N/A
Other Plan Limitations
Compensation Cap

$350,000

 345,000

330,000

 305,000 290,000
Defined Benefit Plan Maximum Benefit

$280,000

 275,000

265,000

 245,000

230,000
Defined Contribution Plan Maximum Contribution $70,000

69,000

66,000

 61,000

58,000
Highly Compensated Employees’ Compensation Exceeding $160,000

155,000

 150,000 135,000

130,000
Key Employee Officer Compensation

$230,000

 220,000 215,000 200,000

185,000
Key Employee 1% Owner

$150,000

 150,000 150,000 150,000

150,000
SEP Participation Coverage Compensation Level

$750

 750 750 650

650
ESOP Threshold for 5-Year Distribution Period

$1,415,000

1,380,000

 1,330,000 1,230,000

1,165,000

ESOP Incremental Threshold for Extending 5-Year Distribution Period (max 5 additional years)

 $280,000 275,000 265,000 245,000

230,000
Social Security Taxable Wage Bases
– Social Security $176,100

168,600

 160,200 147,000 142,800
– Medicare

No Limit

 No Limit No Limit No Limit

No Limit
Social Security Tax Rates By Percentage
– Social Security – Employer

6.20

 6.20 6.20 6.20

6.20
– Social Security – Employee

6.20

 6.20 6.20 6.20

6.20
– Medicare – Employer and Employee

1.45

 1.45 1.45 1.45

1.45
– Per Employer/Per Employee Combined Rate

7.65

 7.65 7.65 7.65

7.65
Combined Rate

15.30

 15.30 15.30 15.30

15.30
Additional Medicare Tax on Wages above $200,000 – Employee Only

.9**

 .9** .9** .9**

.9**

*Optional under SECURE 2.0. Each plan sponsor will decide whether to implement this feature in their retirement plans. Participants must meet specific criteria.

**The Affordable Care Act imposes an additional .9% Medicare tax on wages above $200,000 ($250,000 for married couples filing jointly, $125,000 for married couples filing separately, and $200,000 for other filers). Employers are required to withhold the additional .9% Medicare tax (a total of 2.35%) on wages above $200,000, regardless of the employee’s tax filing status. Employers do not match this additional tax.

Health & Welfare Cost-of-Living Adjustments
Maximum Dollar Limitations

Health Care Flexible Spending Accounts in a Cafeteria Plan

2025

 2024 2023

2022
Maximum Contribution $3,300

3,200

 2,850

2,750
Maximum Carryover Amount1 $660 640 610 570
Dependent Care Flexible Spending Accounts in a Cafeteria Plan
Maximum Contribution

$5,000

 5,000 5,000

5,000
Maximum Contribution if Married Filing Separately

$2,500

 2,500 2,500 2,500
Dependent Care Tax Credit on Personal Tax Return2
One Qualifying Individual

$3,000

3,000

 3,000 3,000
Two or more Qualifying Individuals

$6,000

6,000

 6,000 6,000
Qualified Relative Income Allowance
Maximum Amount a qualified relative can earn and still be considered a dependent for tax purposes

$5,200

5,050

 4,700 4,400
Qualified Transportation Plan3
Parking – Monthly Limit

$325

315

 300

280
Transit Passes and Vanpooling (Combined) – Monthly Limit

$325

315

 300 280
Bicycle benefit (Employer-funded) – Monthly Limit

$20

20

 20

20
Adoption Assistance Program4
Maximum Exclusion for Employer-Provided Program5 $17,280

16,810

 15,950

14,890
Adoption Tax Credit Limit $17,280

16,810

 15,950 14,890
Modified Adjusted Gross Income Limits for Employer-Provided
Adoption Assistance Program and Tax Credit

Full credit if adjusted gross income below

$259,190

 252,150 239,230 223,410

Phased credit if adjusted gross income between

$259,190
-$299,190

 252,150–292,150 239,230–279,230 223,410–263,410

No credit allowed for adjusted gross income above

$299,190

 292,150 279,230 263,410
Educational Assistance Programs
Maximum nontaxable educational assistance benefit

$5,250

 5,250 5,250 5,250
Health Savings Accounts

Contribution Limit per Individual

$4,300

 4,150

3,850

 3,650

Contribution Limit per Family

 $8,550

8,300

 7,750 7,300

Catch-up Contribution for Age 55 and Older

 $1,000 1,000 1,000

1,000

Out-of-pocket Maximum per Individual

 $8,300

8,050

 7,500

7,050

Out-of-pocket Maximum per Family

 $16,600

16,100

 15,000 14,100

Minimum Deductible per Individual

 $1,650 1,600

1,500

 1,400

Minimum Deductible per Family

$3,300

3,200

 3,000 2,800
Highly Compensated Employee Compensation Exceeding $160,000

155,000

 150,000

135,000
Key Employee Officer Compensation $230,000

220,000

215,000

 200,000
Key Employee 1% Owner $150,000 150,000 150,000 150,000

1 The carryover maximum limit applies in the following plan year. For example, the amount that can carry over into 2025 is $640
(20% of the 2024 Health FSA limit). The amount that can carry over into 2026 is $660 (20% of the 2025 HFSA limit).
2 Credit may be adjusted based on the level of the taxpayer’s adjusted gross income and is reduced by amounts excluded from income under a Dependent Care Reimbursement Account plan sponsored by an employer.
3 The Tax Cuts & Jobs Act of 2017 changed the bicycle benefit to a taxable benefit for years after 2017 and before 2026.
4 An employer-sponsored Adoption Assistance Program may be a stand-alone program or contained in a Cafeteria Plan.
5 If an employer-sponsored Adoption Assistance Program is contained in a Cafeteria Plan, this is the maximum limit within the plan year.