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 2018 (& 2017) are listed below. Note that the annual cap on employee pre-tax contributions to a Health FSA (IRC § 125) has increased $50, to $2,650; H.S.A. and HDHP amounts have increased, and the HCE threshold remains the same at $120,000. (This article was amended 3/7/18 to reflect the $50 reduction in the H.S.A. maximum annual contribution for family level coverage, announced by the IRS 3/5/18.)
| Tax Benefit | 2017 | 2018 |
| 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 | $175,000 |
| Social Security Taxable Wage Base – § 2230 of Social Security Act | $127,200 | $128,400* |
| 401(k), 403(b), Profit-Sharing Plans: 2017 2018 | ||
| Maximum Elective Deferrals (annually) – IRC § 402(g)(1) | $18,000 | $18,500 |
| Catch-up Contributions (for those age 50 and older) | $ 6,000 | $ 6,000 |
| Annual Compensation – IRC § 401(a)(17) | $270,000 | $275,000 |
| Annual Defined Contribution Limits – IRC § 415(c)(1)(A) | $54,000 | $55,000 |
| Individual Retirement Accounts (IRAs): 2017 2018 | ||
| 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) 2017 2018 | ||
| Maximum Annual Contribution – Individual Coverage | $3,400 | $3,450 |
| Maximum Annual Contribution – Family Coverage | $6,750 | $6,850** |
| 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) 2017 2018 | ||
| Minimum Annual Deductible – Individual Coverage | $1,300 | $1,350 |
| Minimum Annual Deductible – Family Coverage | $2,600 | $2,700 |
| Maximum Out-of-Pocket Expenses – Individual Coverage | $6,550 | $6,650 |
| Maximum Out-of-Pocket Expenses – Family Coverage | $13,100 | $13,300 |
| Non-HDHP Health Plans (Not H.S.A.-Compatible) (No minimum deductible) | ||
| Maximum Out-of-Pocket Expenses – Individual Coverage | $7,150 | $7,350 |
| Maximum Out-of-Pocket Expenses – Family Coverage | $14,300 | $14,700 |
| Dependent Care Assistance Plan (DCAP) & Health Flexible Spending Account (HFSA) Maximum Annual Pre-tax Contribution through 125 Plan: 2017 2018 | ||
| 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 | $2,650 |
| Qualified Transportation Benefits: IRC § 132(f) 2017 2018 | ||
| Parking – monthly maximum | $255 | $260 |
| Vanpooling & Transit – monthly maximum | $255 | $260 |
| Affordable Care Act Amounts 2017 2018 | ||
| 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% | $695 or 2.5%x |
| Annual 4980H(a) penalty for large employer not offering MEC to at least 95% of full-time employees. Penalty amount is times total number of full-time employees minus 30 | $2,260 | $2,320 |
| 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. | $3,390 | $3,480 |
* $128,400 is the corrected, lower amount announced 11-27-17 for the SS maximum taxable wage base. The original amount announced was $128,700.
**$6,850 is the corrected, lower amount announced 3-5-18 for the maximum H.S.A. contribution for family coverage. Internal Revenue Bulletin No. 2018–10, released March 5. The original amount was $6,900. The IRS recalculated the limit because the Tax Cuts and Jobs Act that was enacted at the end of 2017 applies the so-called chained consumer price index (chained CPI) to increases in HSA and a few other employee benefit contribution limits.
Many of the other 2018 dollar limits are in IRS Notice 2017-64 (retirement plan limits) at https://www.irs.gov/pub/irs-drop/n-17-64.pdf