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IRS Releases 2018 Inflation Adjustments for Various Tax Benefits

posted: Thursday, October 19th

Some Tax Benefits Increase Slightly, Others Unchanged

The Internal Revenue Service (IRS) has announced a number of inflation-adjusted tax items for 2018, some of which remain unchanged. Among other items, the annual dollar limit on employee contributions to employer-sponsored health flexible spending arrangements (FSAs) increases to $2,650 (up from $2,600).

Other Items of Interest

Other inflation-adjusted items for tax year 2018 that may be of interest to employers and employees include the following:

Qualified Transportation Fringe Benefits. For tax year 2018, the monthly limitation for the qualified transportation fringe benefit rises to 0 (up from 5 for 2017) for transportation and qualified parking.
Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs). For tax year 2018, to qualify as a QSEHRA, the total amount of payments and reimbursements cannot exceed ,050 per employee (up from ,950 for 2017) or ,250 per family (up from ,000 for 2017).
Archer MSAs. The 2018 limits for annual deductibles and maximum out-of-pocket expenses for high deductible health plans (HDHPs) are as follows:
Self-only coverage. The plan must have an annual deductible that is at least ,300 (up from ,250 for 2017); but not more than ,450 (up from ,350 for 2017). The annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed ,600 (up from ,500 for 2017).
Family coverage. For tax year 2018, the floor for the annual deductible increases to ,600 (up from ,500 for 2017), however the deductible cannot be more than ,850 (up from ,750 for 2017). The annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed ,400 (up from ,250 for 2017).
Earned Income Credit. The maximum Earned Income Credit amount is $6,444 for taxpayers filing jointly who have 3 or more qualifying children (up from a total of $6,318 for 2017). IRS Revenue Procedure 2017-58 includes a table that provides maximum credit amounts for other categories, income thresholds, and phase-outs.