IRS Increases Tax Limits for Insurance, Estates, Learning, Foreign Income Exclusion

The IRS has announced additional annual inflation adjustments for more than 50 tax provisions for 2016, including the tax rate schedules and other tax changes.

Revenue Procedure 2015-53 provides details about these annual adjustments, including:

For tax year 2016 participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,250, up from $2,200 for tax year 2015, but not more than $3,350, up from $3,300 for tax year 2015.

For self-only coverage the maximum out-of-pocket expense amount remains at $4,450. For tax year 2016 participants with family coverage, the floor for the annual deductible remains at $4,450; the deductible cannot be more than $6,700, up $50 from the limit for tax year 2015. For family coverage, the out-of-pocket expense limit remains at $8,150.

Among other new limits:

• The AGI amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $111,000, up from $110,000 for tax year 2015.

• The foreign earned income exclusion is $101,300, up from $100,800.

• Estates of decedents who die during 2016 have a basic exclusion amount of $5.45 million, up from a total of $5.43 million for estates of decedents who died in 2015.

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