If you have money sitting in a Flexible Spending Account, the clock is already running: for most plans, whatever is left after December 31, 2026 is forfeited - handed back to your employer. Two IRS-approved exceptions soften that rule, and your plan is allowed only one of them, or neither. Which one you have changes the smart move completely, so start there. The free FSA Calculator turns your balance and your plan type into the exact dollar figure at risk.
Rule 1 - The carryover: $680 survives
If your plan adopted the carryover, up to $680 of your unused 2026 health FSA balance rolls into 2027 (the IRS maximum for 2026, set in Revenue Procedure 2025-32; your employer may set a lower cap). Everything above that line is still forfeited on December 31. So the practical target is not zero - it is "spend the balance down to $680 or less". A $900 balance means $220 to spend this month; a $1,500 balance means $820.
Rule 2 - The grace period: you have until March 15, 2027
Other plans skip the carryover and offer a grace period instead: you can keep incurring eligible expenses against your 2026 balance until March 15, 2027. Nothing is forfeited on December 31 - but the whole remaining balance is on the line in mid-March, and January is exactly when people forget about it. A plan cannot offer both a carryover and a grace period on the same health FSA; it is one or the other.
Rule 3 - Neither: December 31 is the whole story
Some plans offer no softening at all. If that is yours, the entire remaining balance must be spent on eligible expenses incurred by December 31, 2026. Do not leave it to the last week: dental offices and opticians fill up in late December precisely because thousands of FSA holders have the same deadline.
The trap: run-out is not spending time
Almost every plan also has a run-out period, commonly until March 31, 2027. This is only the deadline to submit claims and receipts for expenses you already incurred inside the spending window. It does not let you buy anything new against the old balance. Confusing the two deadlines is the most common way people lose money they actually spent.
What to buy with a leftover balance
Spend it on things you would genuinely use - all of these are FSA-eligible: prescription sunglasses or a spare pair of glasses; contact lenses and solution for next year; the dental work you have been postponing; sunscreen of SPF 15 or higher; over-the-counter medicines and allergy remedies (no prescription needed since 2020); period products; a blood-pressure monitor or thermometer; first aid supplies. Booking January appointments does not count - the expense must be incurred (the service received or the item bought) inside your window.
Electing for next year? Elect what you will spend
Open enrollment is also the moment to size next year's election: the 2026 health FSA limit is $3,400, and the Dependent Care FSA limit is $7,500 per household (your employer must have adopted the new amount). The winning strategy is boring - elect your predictable spending, not the maximum. The FSA Calculator does that maths too, including your tax saving and the per-paycheck deduction. Choosing a health plan to go with it? Compare plans by true yearly cost in the Health Plan Cost Calculator.
Frequently asked questions
When does FSA money expire in 2026?
For most plans, December 31, 2026 is the deadline to incur expenses. If your plan has a grace period, you can incur expenses until March 15, 2027; if it has a carryover, up to $680 rolls into 2027 and the rest expires December 31.
How much FSA money rolls over to 2027?
Up to $680 for a health FSA - the IRS maximum carryover for the 2026 plan year (Revenue Procedure 2025-32). Your employer can set a lower cap, and plans with a carryover cannot also offer a grace period.
Can I use my FSA in January for last year's balance?
Only if your plan has a grace period (expenses until March 15, 2027) or a carryover (up to $680 rolled into the new year). Otherwise last year's balance was forfeited on December 31. The run-out period into March is only for submitting claims, not new spending.
What counts as an FSA-eligible purchase?
Medical, dental and vision care, prescriptions, over-the-counter medicines, sunscreen SPF 15+, contact lenses and solution, prescription glasses and sunglasses, period products, thermometers, blood-pressure monitors and first aid items are all eligible.