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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 2017 (& 2016) are listed below. Note that the annual cap on employee pre-tax contributions to a Health FSA (IRC § 125) has increased to $2,600.
Tax Benefit | 2017 | 2016 |
Highly Compensated Employee (HCE) Threshold – IRC §414(q)(1)(B) | $120,000 | $120,000 |
Key Employee, Officer – IRC § 416(i)(1)(A)(i) | $175,000 | $170,000 |
Social Security Taxable Wage Base – § 2230 of Social Security Act | $127,200 | $118,500 |
401(k), 403(b), Profit-Sharing Plans: | ||
Maximum Elective Deferrals (annually) – IRC § 402(g)(1) | $18,000 | $18,000 |
Catch-up Contributions (for those age 50 and older) | $ 6,000 | $ 6,000 |
Annual Compensation – IRC § 401(a)(17) | $270,000 | $265,000 |
Annual Defined Contribution Limits – IRC § 415(c)(1)(A) | $54,000 | $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): IRC § 223(b)(2)(A) | ||
Maximum Annual Contribution – Individual Coverage | $3,400 | $3,350 |
Maximum Annual Contribution – Family Coverage | $6,750 | $6,750 |
Catch-up Contribution – age 55 and over – IRC § 223(b)(2)(A) | $1,000 | $1,000 |
High Deductible Health Plan (HDHP): IRC § 223(c)(2)(A) | ||
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 | $6,550 | $6,550 |
Maximum Out-of-Pocket Expenses – Family Coverage | $13,100 | $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” – IRC § 129 | $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 | $2,600 | $2,550 |
Adoption Credit & Exclusion from Income (may take both if enough expenses): | ||
Adoption Tax Credit (phases out between AGI of $203,540 and $243,540) – IRC § 23 | $13,570 | $13,460 |
Adoption Assistance, Maximum Annual Pre-tax Contribution through 125 Plan – IRC § 137 | $13,570 | $13,460 |
Qualified Transportation Benefits: IRC § 132(f) | ||
Parking – monthly maximum | $255 | $255 |
Vanpooling & Transit – monthly maximum | $255 | $255 |
Personal Income Tax Filing Amounts IRC § 63(c)(2) | ||
Dependent Exemption – IRC § 151(d) | $ 4,050 | $ 4,050 |
Standard Deduction, Married Filing Jointly (MFJ) | $12,700 | $12,600 |
Standard Deduction, Head of Household | $ 9,350 | $ 9,300 |
Standard Deduction, Single or Married Filing Separately | $ 6,350 | $ 6,300 |
Medicare Part B: | ||
Medicare Part B Premium (existing “hold harmless” enrollees) – estimated | $105.20 | $104.90 |
Medicare Part B Deductible | $ 204 | $166 |
Small Business Health Care Tax Credit | ||
Maximum tax credit phases out if employer’s average annual wages are in excess of this dollar amount. Rev. Proc. 2016-55 | $26,200 | $25,900 |
Affordable Care Act Amounts | ||
Annual 5000A(c) penalty for individual not having “minimum essential coverage” (MEC): greater of dollar amount or a percentage of modified adjusted gross income (MAGI) – file Form 8965 if a tax is due | $695 or 2.5% | $395 or 2.0% |
Annual 4980H(a) penalty for large employer not offering MEC to at least 95% (70% in 2015) of full-time employees. Penalty amount is times total number of full-time employees minus 30 (minus 80 in 2015) | Not yet announced | $2,160 |
Annual 4980H(b) penalty for large employer not offering affordable minimum value coverage to all full-time employees. Penalty amount is per each full-time employee who qualifies for a subsidy to buy insurance in the marketplace. | Not yet announced | $3,240 |
Resources
- Social Security Administration announcement of 2017 SS changes
- IRS announcement on Retirement plan COLAs & $ limits for 2017
- IRS announcement “In 2017, Some Tax Benefits Increase Slightly Due to Inflation Adjustments, Others Are Unchanged” (Oct. 25, 2016)
- Rev. Proc. 2016-55: This revenue procedure sets forth numerous inflation-adjusted tax Code amounts for 2017
- Rev Proc 2016-28: This revenue procedure sets forth inflation-adjusted amounts for H.S.A.s and HDHPs for 2017