2016 Dollar Amounts and Cost of Living Adjustments (COLAs) for Benefit Plans and Taxes
The IRS and Social Security Administration each year announce the cost-of-living adjustments affecting tax and employee benefits dollar amounts for the upcoming calendar year. Some highlights for 2016 (& 2015) are listed below. Many of the 2016 numbers remain unchanged from 2015.
| Tax Benefit | 2015 | 2016 |
|---|---|---|
| Highly Compensated Employee (HCE) Threshold | $120,000 | $120,000 |
| Key Employee, Officer | $170,000 | $170,000 |
| Social Security Taxable Wage Base | $118,500 | $118,500 |
| 401(k), 403(b), Profit-Sharing Plans: | ||
| Maximum Elective Deferrals (annually) | $18,000 | $18,000 |
| Catch-up Contributions (for those age 50 and older) | $6,000 | $6,000 |
| Annual Compensation | $265,000 | $265,000 |
| Annual Defined Contribution Limits | $53,000 | $53,000 |
| Individual Retirement Accounts (IRAs): | ||
| IRA Contribution Limit | $5,500 | $5,500 |
| IRA Catch-up Contributions (age 50 and older) | $1,000 | $1,000 |
| Health Savings Accounts (H.S.A.s): | ||
| Maximum Annual Contribution – Individual Coverage | $3,350 | $3,350 |
| Maximum Annual Contribution – Family Coverage | $6,650 | $6,750 |
| Catch-up Contribution – age 55 and over | $1,000 | $1,000 |
| High Deductible Health Plan (HDHP): | ||
| Minimum Annual Deductible – Individual Coverage | $1,300 | $1,300 |
| Minimum Annual Deductible – Family Coverage | $2,600 | $2,600 |
| Maximum Out-of-Pocket Expenses – Individual Coverage | $6,450 | $6,550 |
| Maximum Out-of-Pocket Expenses – Family Coverage | $12,900 | $13,100 |
| Dependent Care Assistance Plan (DCAP) & Health Flexible Spending Account (HFSA). Maximum Annual Pre-tax Contribution through 125 Plan: | ||
| DCAP if employee is married and filing a joint return or is a single parent filing as “House of Household” | $5,000 | $5,000 |
| DCAP if employee is married but filing a separate return from spouse | $2,500 | $2,500 |
| HFSA, regardless of marital status | $2,550 | $2,550 |
| Adoption Credit & Exclusion from Income (may take both if enough expenses): | ||
| Adoption Tax Credit (phases out between modified AGI of $201,920 and $241,920, for 2016) | $13,400 | $13,460 |
| Adoption Assistance, Maximum Annual Pre-tax Contribution through 125 Plan (same phase-out as for Adoption Tax Credit, for higher MAGI) | $13,400 | $13,460 |
| Qualified Transportation Benefits: | ||
| Parking – monthly maximum | $250 | $255 |
| Vanpooling & Transit – monthly maximum | $130* | $130 |
| Personal Income Tax Filing Amounts | ||
| Dependent Exemption | $4,000 | $4,050 |
| Standard Deduction, Married Filing Jointly (MFJ) | $12,600 | $12,600 |
| Standard Deduction, Head of Household | $9,250 | $9,300 |
| Standard Deduction, Single or Married Filing Separately | $6,300 | $6,300 |
| Medicare Part B: | ||
| Medicare Part B Premium – for individuals subject to “hold harmless” provision | $104.90 | $104.90 |
| Medicare Part B Premium – for individuals NOT subject to “hold harmless” provision** | $104.90 | $121.80 |
| Medicare Part B Deductible | $147 | $166 |
| Small Business Health Care Tax Credit | ||
| Maximum tax credit begins to phase out if employer’s average annual wages are in excess of this dollar amount, and completely phases out if average annual wages are twice this amount | $25,800 | $25,900 |
