IRS 2018 Tax Benefit Adjustments and Pension Plan Limitations Released

The IRS announced recently its annual adjustments to over 50 tax provisions, as well as the new pension plan limitations. Some of the key changes include:

  • Standard Deduction increases from $12,700 to $13,000 for married couples filing jointly, and from $6,350 to $6,500 for single and married taxpayers filing separately.
  • Personal Exemption increases from $4,050 to $4,150. The exemption is subject to a phase-out beginning with adjusted gross incomes of $266,700 ($320,000 for married couples filing jointly). It phases out completely at $389,200 ($442,500 for married couples filing jointly).
  • Annual contribution limit for health flexible spending arrangements (FSAs) increases from $2,600 to $2,650.
  • Minimum charitable contribution increases from $53.50 to $54.00, and the maximum cost of a token gift offered in return increases from $10.70 to $10.80*.
  • Reimbursement limit for qualified small employer health reimbursement arrangements (QSEHRAs) increases from $4,950 to $5,050 for employee-only arrangements and from $10,000 to $10,250 for arrangements for family members.
  • Annual contribution limit for 401(k), 403(b), and other pension plans increases from $18,000 to $18,500.

Read more from the IRS about the Tax Benefit Adjustments (IRS Notice 2017-58) and the Pension Plan Limitations (IRS Notice 2017-64).

*The miminum charitable contribution and maximum cost of token figures were updated by the IRS in March 2018 and have been adjusted on this news item accordingly. Read more on the update here.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.


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