November 03, 2017

IRS Issues 2018 Inflation-Adjusted Tax

The Internal Revenue Service published adjustments to certain tax items. The monthly limit for the qualified transportation fringe benefits and for qualified parking is to increase to $260 from $255 in 2018 while other tax benefits are to increase slightly in 2018 because of inflation adjustments, the IRS said.

Each year, the agency publishes inflation adjustments for more than 50 tax provisions. The latest adjustments are to be used on 2018 tax returns filed in 2019. Following are payroll-related provisions that are to change in 2018:
 
  • The personal exemption is to increase to $4,150 from $4,050.
  • The standard deduction for married filing jointly is to increase to $13,000 from $12,700 in 2017, to $6,500 from $6,350 for single taxpayers and married individuals filing separately, and to $9,550 from $9,350 for heads of households.
  • The foreign earned income exclusion is to increase to $104,100 from $102,100.
  • The adoption tax credit is to increase to $13,840 from $13,570.
  • The health flexible spending arrangement limitation is to increase to $2,650 from $2,600.
  • Penalty amounts for failing to file tax returns and deposit taxes also increase for 2018, the revenue procedure said.

Reproduced with permission from Payroll Administration Guide Newsletter, 28 PAG 187 (November 1, 2017). Copyright 2017 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>
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