In June, the Philadelphia City Council approved a 1.5 cent per ounce tax on any drink containing less than 50% fruit juice, vegetable juice or real milk – the first tax on sugary drinks by a major city. The soda tax, which takes effect January 1, 2017, is expected to raise $91 million for Philadelphia schools, parks and recreation centers. While the tax is intended to have a positive impact on population health, one must wonder if cheese steaks could be next target!
The Internal Revenue Service (IRS) has announced a number of inflation-adjusted tax items for 2016, some of which remain unchanged. Among other items, the annual dollar limit on employee contributions to employer-sponsored health flexible spending arrangements (FSAs) remains unchanged (at $2,550).
Other Items of Interest
Other inflation-adjusted items for tax year 2016 that may be of interest to employers and employees include the following:
- Qualified Transportation Fringe Benefits. For tax year 2016, the monthly limitation for the qualified transportation fringe benefit remains at $130 for transportation, but rises to $255 for qualified parking (up from $250 for tax year 2015).
- Archer MSAs. The 2016 limits for annual deductibles and maximum out-of-pocket expenses for high deductible health plans (HDHPs) are as follows:
- Self-only coverage. The plan must have an annual deductible that is at least $2,250 (up from $2,200 for 2015); but not more than $3,350 (up from $3,300 for tax year 2015). The annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed $4,450 (unchanged from 2015).
- Family coverage. For tax year 2016, the floor for the annual deductible remains at $4,450, however the deductible cannot be more than $6,700 (up $50 from 2015). The annual out of-pocket expenses required to be paid (other than for premiums) for covered benefits cannot exceed $8,150 (unchanged from 2015).
- Earned Income Credit. The maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children (up from a total of $6,242 for tax year 2015). IRS Revenue Procedure 2015-53 includes a table that provides maximum credit amounts for other categories, income thresholds, and phase-outs.
For More Information Details on these inflation adjustments and others are contained in Revenue Procedure 2015-53.
While the ACA’s excise tax, scheduled to become effective in 2018, may seem like a soft cloud in the distant horizon, some employers have targeted 2015 as the time to look for ways to avoid the tax imposed on high value health plans.