Employee Benefits Compliance

2016 Dollar Amounts and Cost of Living Adjustments

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 Benefit20152016
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
Leavitt Group—national strength, local trust. Leavitt Group is the 14th largest independently held insurance brokerage in the United States. We pride ourselves on our experience and ability to help our clients succeed. Contact an agency near you