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2016 limits for commuting, adoption, and other benefits also announced
updated on 12/18/2015
Update: In December 2015, legislation was enacted making both the mass-transit and qualified-parking tax-excludable amounts equal for 2016, at $255/month. The legislation also retroactively made mass-transit and parking benefits equal for 2015, at $250/month. See the
SHRM Online article
Law Makes Tax Breaks Equal for Parking & Transit Benefits. The chart of qualified transit benefits in the article below was updated to reflect the new monthly caps on pretax contributions.
The IRS issued
Revenue Procedure 2015-53, which contains 2016 limits for qualified transportation benefits, adoption assistance programs, long-term care premiums, health flexible spending accounts (FSAs), and medical savings accounts.
The guidance is in addition to
2016 retirement plan limits that the IRS also released on Oct. 21, 2015. The 2016 limits for
contributions to health savings accounts and for high-deductible health plans were released earlier, in May 2015.
The 2016 limit on voluntary employee salary reductions for contributions to health FSAs is $2,550, unchanged from 2015.
Qualified Transportation Benefits
The monthly limits under section 132(f) for tax years beginning in 2016 (compared with 2015) are:
Commuter highway vehicle and transit pass
$130 (retroactively raised to $250)
Adoption Assistance Programs
For employer-provided adoption assistance programs, the maximum amount excludible from an employee’s income in 2016 (compared with 2015) for the adoption of a child (both for regular and special needs adoptions) is shown below. The excludible amount phases out for taxpayers with modified adjusted gross income that exceeds certain levels:
Phased-out income thresholds
Long-Term Care Premiums
The limits under section 213 for eligible long-term care premiums that qualify as medical expenses for tax years beginning in 2016 (compared with 2015) are shown below, based on attained age before the close of the taxable year:
Age 40 or less
Over 40 but under 50
Over 50 but under 60
Over 60 but under 70
Medical Savings Accounts
Medical savings accounts (MSAs) are available to employees of small businesses and self-employed individuals if they participate in high-deductible health plans. The deductible limits and out-of-pocket limits in connection with these plans differ
from those for HSAs.
For tax years beginning in 2016, the annual deductible for an MSA high-deductible health plan may not be less than $2,250 and not more than $3,350 for single coverage. The annual deductible for an MSA high-deductible health plan may not be less than $4,450 and not more than $6,700 for family coverage. Also, annual out-of-pocket expenses (exclusive of premiums) cannot exceed $4,450 for single coverage and $8,150 for family coverage.
Kin Chan and Andrew Eisner, ASA, EA, MAAA, FCA, contribute to the Knowledge Resource Center of Buck Consultants at Xerox. ©
2015 Xerox Corp. and Buck Consultants. All rights reserved. Republished with permission.
Additional online links in this article were added by SHRM Online.
Related SHRM Articles:
2016 Payroll Tax Unchanged; Tax Brackets Nudge Up,
SHRM Online Compensation, October 2015
For 2016, Most Retirement Plan Limits Stay Put,
SHRM Online Benefits, October 2015
IRS Issues 2016 HSA Contribution Limits, SHRM Online Benefits, May 2015
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