On November 9, 2023, the IRS released Revenue Procedure 2023-34 containing the 2024 tax-year inflation adjustments for a number of income tax provisions, including health flexible spending accounts, qualified transportation fringe benefits, qualified adoption assistance programs and eligible long-term care premiums. Revenue Procedure 2023-34 also includes the indexed dollar amounts for the federal income tax-related standard deduction and the federal income tax rate tables for 2024.
On November 1, 2023, the IRS released Notice 2023-75, which includes the qualified retirement plan limits for 2024. These limits restrict the contributions that can be made to, and benefits that can be paid from, qualified retirement plans as well as the compensation that can be used when determining benefits.
The table below includes these limits, along with the Social Security maximum taxable wage base that was announced on October 12, 2023, and the limits relevant to health savings accounts and excepted-benefit health reimbursement arrangements that were released earlier this year in Revenue Procedure 2023-23.
The 2024 tax-related limits potentially affect the design, administration, communication and tax reporting for retirement and benefit-related plans.
| 2023 | 2024 | |
|---|---|---|
| Health flexible spending accounts (health FSAs) (general and limited purpose) | ||
| Maximum annual health FSA salary reduction contribution | $3,050 | $3,200 |
| Maximum annual health FSA carryover of unused amounts from the prior plan year for plans that permit carryover | $610 | $640 |
| Qualified transportation fringe benefits | ||
| Monthly limitation amounts | ||
| — Transit pass and commuter highway vehicle (combined) | $300 | $315 |
| — Qualified parking | $300 | $315 |
| Qualified adoption assistance | ||
| Maximum per adoption income tax exclusion | ||
| — Child with special needs (regardless of actual expenses) | $15,950 | $16,810 |
| — Other adoptions | $15,950 | $16,810 |
| Adjusted gross income (AGI) tax exclusion phaseout | ||
| — Phaseout begins | $239,230 | $252,150 |
| — Phaseout complete | $279,230 | $292,150 |
| Dependent care assistance (including FSAs)[1] | ||
| Maximum annual dependent care assistance benefit | ||
| — Individual or a married couple filing jointly | $5,000 | $5,000 |
| — Married individual filing separately | $2,500 | $2,500 |
| Qualified retirement plan limits | ||
| Maximum recognizable compensation | $330,000 | $345,000 |
| Highly compensated employee | $150,000 | $155,000 |
| Section 415 benefit limits | ||
| — Defined benefit plans | $265,000 | $275,000 |
| — Defined contribution plans | $66,000 | $69,000 |
| Limit on pretax elective deferrals | ||
| — Under age 50 | $22,500 | $23,000 |
| — Age 50 and over | $30,000 | $30,500 |
| Qualifying longevity annuity contract (QLAC)[2] | ||
| Investment limit | $200,000 | $200,000 |
| Social Security taxable wage base | ||
| Taxable wage base | $160,200 | $168,600 |
| Eligible long-term care (LTC) premiums | ||
| Annual limitation on LTC premiums includible as medical care | ||
| Age before close of tax year | ||
| — 40 or under | $480 | $470 |
| — More than 40 but not more than 50 | $890 | $880 |
| — More than 50 but not more than 60 | $1,790 | $1,760 |
| — More than 60 but not more than 70 | $4,770 | $4,710 |
| — More than 70 | $5,960 | $5,880 |
| Standard deduction | ||
| Filing status | ||
| — Married individuals filing jointly | $27,700 | $29,200 |
| — Heads of households | $20,800 | $21,900 |
| — Unmarried individuals | $13,850 | $14,600 |
| — Married individuals filing separately | $13,850 | $14,600 |
| Health savings accounts (HSAs) | ||
| Individual coverage | ||
| — Maximum annual HSA contribution | $3,850 | $4,150 |
| — Minimum annual deductible for HDHP | $1,500 | $1,600 |
| — Maximum annual out-of-pocket expenses for HDHP | $7,500 | $8,050 |
| Family coverage | ||
| — Maximum annual HSA contribution | $7,750 | $8,300 |
| — Minimum annual deductible for HDHP | $3,000 | $3,200 |
| — Maximum annual out-of-pocket expenses for HDHP | $15,000 | $16,100 |
| Catch-up contributions[3] (for individuals attaining age 55 by December 31 until enrolled in Medicare) | $1,000 | $1,000 |
| Excepted-benefit HRAs | ||
| — Maximum amount employers can contribute | $1,950 | $2,100 |
