IRS Releases COLA Adjustment to 2017 Tax Limits

Posted by BAS - 27 October, 2016

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This week, the Internal Revenue Service released the annual inflation adjustments that will apply to various tax provisions in 2017.  Revenue Procedure 2016-55, which can be accessed here,  confirms rates for 51 separate tax provisions.  From an employee benefits standpoint, the following limits may be of interest to employers:

  • The dollar limit on voluntary employee salary reduction contributions to health flexible spending accounts is $2,600.
  • The monthly exclusion amount for transportation and transit passes is $255.  
  • The monthly limit for the qualified parking exclusion is $255.
  • The dollar amount used to determine the penalty for an individual who does not maintain minimum essential health coverage is $695.
  • For participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible of not less than $2,250 but not more than $3,350.  For self-only coverage, the maximum out of pocket expense amount is $4,500.  For family coverage coverage, the annual deductible minimum is $4,500 and maximum is $6,750.  The out of pocket expense limit for family coverage is $8,250.
  • The dollar amount that may be claimed as an employee health insurance expense of small employers is $26,200.  This amount is used for limiting the small employer health insurance credit and for determining who is a small employer.
  • The maximum amount that can be excluded from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program is $13,570.

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