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 $255 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 $2,250 (unchanged from 2016) and not more than $3,350 (unchanged from 2016). The annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed $4,500 (up from $4,450 in 2016).
- Family coverage. For tax year 2017, the floor for the annual deductible is $4,500 (up from $4,450 in 2016), however the deductible cannot be more than $6,750 (up from $6,700 in 2016). The annual out of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed $8,250 (up from $8,150 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.
