Updated September 29, 2026. Quick answer: the 2026 Highly Compensated Employee (HCE) compensation threshold is $160,000, unchanged from 2025, per IRS Notice 2025-67. This is the prior-year compensation level (an employee who earned more than this amount in 2025 is an HCE for 2026 nondiscrimination testing purposes), a completely different figure from the $360,000 annual compensation cap used to calculate contributions, which many pages online conflate with it. Milliman’s July 2026 forecast projects the threshold rising to $170,000 for 2027.
The confirmed 2025 and 2026 HCE threshold
| 2025 | 2026 | Projected 2027 | |
|---|---|---|---|
| HCE compensation threshold | $160,000 | $160,000 (unchanged) | $170,000 (Milliman, Aug 13, 2026) |
What this figure actually controls
The HCE threshold under 26 U.S.C. §414(q)(1)(B) doesn’t cap anyone’s own contributions; it determines who counts as “highly compensated” for a plan’s annual nondiscrimination testing (the tests that stop a 401(k) from disproportionately benefiting owners and executives over rank-and-file employees). It is always a multiple of $5,000 and sat at $155,000 for 2024 before rising to $160,000 for both 2025 and 2026, no increase this year, since the underlying wage index didn’t cross the next $5,000 rounding point. It is unrelated to the §401(a)(17) annual compensation cap ($360,000 for 2026), which limits how much of a person’s pay counts when calculating employer contributions and nondiscrimination ratios, a common point of confusion this page exists partly to correct.
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The 2026 figures on this page were checked against IRS Notice 2025-67 on September 29, 2026. The earlier-year rows were checked against the IRS notice for each of those years.
- IRS Notice 2025-67, §3.06: 2026 HCE threshold, unchanged at $160,000.
- IRS Notice 2024-80, §3.06: 2025 HCE threshold, increased to $160,000 from $155,000.
- IRS, “COLA Increases for Dollar Limitations on Benefits and Contributions”: the IRS table of cost-of-living adjustments to retirement plan limits, 2026 and earlier years.
2027 projection: Milliman, August 13, 2026.
Statute: 26 U.S.C. §414(q)(1)(B).
Related
General information, not tax or legal advice. This page will be updated with the official 2027 figure the day it is announced.