HR Alert

IRS Releases 2017 Inflation Adjustments for Various Tax Benefits

Some Tax Benefits Increase Slightly, Others Unchanged

The Internal Revenue Service (IRS) has announced a number of inflation-adjusted tax items for 2017, some of which remain unchanged. Among other items, the annual dollar limit on employee contributions to employer-sponsored health flexible spending arrangements (FSAs) rises to $2,600 (up from $2,550 in 2016).

Other Items of Interest
Other inflation-adjusted items for tax year 2017 that may be of interest to employers and employees include the following:

  • Qualified Transportation Fringe Benefits. For tax year 2017, the monthly limitation for the qualified transportation fringe benefit is unchanged at 5 for transportation and qualified parking.
  • Archer MSAs. The 2017 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 ,250 (unchanged from 2016) and not more than ,350 (unchanged from 2016). The annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed ,500 (up from ,450 in 2016).
  • Family coverage. For tax year 2017, the floor for the annual deductible is ,500 (up from ,450 in 2016), however the deductible cannot be more than ,750 (up from ,700 in 2016). The annual out of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed ,250 (up from ,150 in 2016).
    Earned Income Credit. The maximum Earned Income Credit amount is $6,318 for taxpayers filing jointly who have 3 or more qualifying children (up from a total of $6,269 for tax year 2016). IRS Revenue Procedure 2016-55 includes a table that provides maximum credit amounts for other categories, income thresholds, and phase-outs.
For More Information
Details on these inflation adjustments and others are contained in IRS Revenue Procedure 2016-55.

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