COLA 2023: Cost-of-Living Adjustments

TRI-AD presents the Cost-of-Living Adjustments (COLAs) for 2023. These limits are provided each year by the Internal Revenue Service and are effective as of January 1, 2023.

Download a Printable Copy

Retirement Cost-of-Living Adjustments
Maximum Dollar Limitations

Employee Deferral Limits

2023

 2022 2021 2020

2019
401(k) Contribution $22,500 20,500 19,500 19,500 19,000
403(b) Contribution $22,500

20,500

19,500

 19,500 19,000

457 Contribution

$22,500

 20,500 19,500 19,500 19,000

SIMPLE 401(k)/IRA

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

401(k), 403(b), 457

 $7,500 6,500 6,500 6,500 6,000

SIMPLE 401(k)/IRA

 $3,500 3,000 3,000 3,000 3,000
Other Plan Limitations
Compensation Cap

$330,000

 305,000

290,000

 285,000 280,000
Defined Benefit Plan Maximum Benefit

$265,000

 245,000

230,000

 230,000

225,000
Defined Contribution Plan Maximum Contribution $66,000

61,000

58,000

 57,000

56,000
Highly Compensated Employees’ Compensation Exceeding $150,000

135,000

 130,000 130,000

125,000
Key Employee Officer Compensation

$215,000

 200,000 185,000 185,000

180,000
Key Employee 1% Owner

$150,000

 150,000 150,000 150,000

150,000
SEP Participation Coverage Compensation Level

$750

 650 650 600

600
ESOP Threshold for 5-Year Distribution Period

$1,130,000

1,230,000

 1,165,000 1,150,000

1,130,000

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

 $265,000 245,000 230,000 230,000

225,000
Social Security Taxable Wage Bases
– Social Security $160,200

147,000

 142,800 137,700 132,900
– 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*

*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

2023

 2022 2021

2020
Maximum Contribution $3,050

2,850

 2,750

2,750
Maximum Carryover Amount1 $610 570 550 500
Dependent Care Flexible Spending Accounts in a Cafeteria Plan
Maximum Contribution

$5,000

 5,000 10,500*

5,000
Maximum Contribution if Married Filing Separately

$2,500

 2,500 5,250* 2,500
Dependent Care Tax Credit on Personal Tax Return2
1 Qualifying Individual

$3,000

3,000

 8,000* 3,000
2 or more Qualifying Individuals

$6,000

6,000

 16,000* 6,000
Qualified Relative Income Allowance
Maximum Amount a qualified relative can earn and still be considered a dependent for tax purposes

$4,700

4,400

 4,300 4,300
Qualified Transportation Plan3
Parking – Monthly Limit

$300

280

 270

270
Transit Passes and Vanpooling (Combined) – Monthly Limit

$300

280

 270 265
Bicycle benefit (Employer-funded) – Monthly Limit

$20

20

 20

20
Adoption Assistance Program4
Maximum Exclusion for Employer-Provided Program5 $15,950

14,890

 14,440

14,300
Adoption Tax Credit Limit $15,950

14,890

 14,440 14,300
Modified Adjusted Gross Income Limits for Employer-Provided
Adoption Assistance Program and Tax Credit

Full credit if adjusted gross income below

$239,230

 223,410 216,660 214,520

Phased credit if adjusted gross income between

$239,230–279,230

 223,410–263,410 216,660–
$256,660		 214,520–
254,520

No credit allowed for adjusted gross income above

$279,230

 263,410 256,660 254,520
Educational Assistance Programs
Maximum nontaxable educational assistance benefit

$5,250

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

Contribution Limit per Individual

$3,850

 3,650

3,600

 3,550

Contribution Limit per Family

 $7,750

7,300 

 7,200 7,100

Catch-up Contribution for Age 55 and Older

 $1,000 1,000 1,000

1,000

Out-of-pocket Maximum per Individual

 $7,500

7,050

 7,000

6,900

Out-of-pocket Maximum per Family

 $15,000

14,100

 14,000 13,800

Minimum Deductible per Individual

 $1,500 1,400

1,400

 1,400

Minimum Deductible per Family

$3,000

2,800

 2,800 2,800
Highly Compensated Employee Compensation Exceeding $150,000

135,000

 130,000

130,000
Key Employee Officer Compensation $215,000

200,000

185,000

 185,000
Key Employee 1% Owner $150,000 150,000 150,000 150,000

*Increased limits due to COVID-19 legislative relief.

1The carryover maximum limit applies in the following plan year. For example, the amount that can carry over into 2023 is $570
(20% of the 2022 Health FSA limit).  The amount that can carry over into 2024 is $610 (20% of the 2023 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 employer-sponsored Adoption Assistance Program is contained in a Cafeteria Plan, this is the maximum limit within the plan year.