On October 25 the IRS released Revenue Procedure 20166-55, which announced the 2017 annual inflation adjustments for more than 50 tax provisions. These adjustments include tax rate schedules, as well as other changes that in general apply to tax returns that will be filed in 2018.
Among the numerous changes, there are several that relate to employee benefits, some of which include:
Adoption Assistance Programs
For taxable years beginning in 2017, the amount that may be excluded from an employee’s gross income is $13,570.
Health Flexible Spending Account (FSA)
For taxable years beginning in 2017, the voluntary employee salary reduction limit under a Section 125 Plan is $2,600.
*Important Note for Employers – The Section 125 (S125) plan document and any Health and Welfare plan document (such as the Summary Plan Description [SPD] that includes the health FSA) must be amended if the employer elects to permit this increased salary reduction limit.
Qualified Transportation Fringe Benefit Exclusion
For taxable years beginning in 2017:
Monthly limitation for qualified commuter transportation; transit pass is $255
Monthly limitation for qualified parking is also $255
Many of the other adjustments listed in the Revenue Procedure 2016-55 have an impact on most taxpayers, some of which are provided below:
Standard Deductions for 2017 Tax Year
Married filing jointly will increase to $12,700; this is an increase of $100
Single or married filing separately $6,350; this is an increase of $50
Head of household also increases $50 to $9,350
Minimum Essential Coverage
For the 2017 calendar year, the dollar amount used to determine the penalty under § 5000A(c) for failure of an individual to maintain minimum essential coverage (MEC) is $695.
To view all of the changes, please follow the link provide for Revenue Procedure 2016-55 here.
The IRS has also made available a summary of some of the adjustments of greatest interest for taxpayers, which can be viewed here.
Link to final rule: https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-22964.pdf
Thank you for choosing Paylocity as your payroll tax partner. Should you have any questions please contact your Paylocity Account Manager.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a payroll service provider are encouraged to seek the advice of a qualified CPA, tax attorney, or advisor.