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PrintThe IRS released cost-of-living adjustments (COLAs) for 2024 reflecting any increases in the flexible spending arrangements (FSA) deferral limit, foreign earned income exclusion, and excludable transportation fringes, among other changes [Rev. Proc. 2023-34, 11-9-23].
Qualified transportation fringes
The amounts that may be excluded from gross income for employer-provided qualified transportation fringe benefits (transportation in a commuter highway vehicle and any transit pass) and qualified parking for 2024 increase to $315 ($300 in 2023).
Health FSAs
For plan years beginning in 2024, the dollar limitation under IRC §125(i) on voluntary employee salary reductions for contributions to health FSAs increases to $3,200 ($3,050 in 2023). For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount increases to $640 ($610 in 2023).
Standard deduction
The standard deduction amounts for 2024 increase to $29,200 for married couples filing jointly or surviving spouses ($27,700 in 2023), $14,600 for single taxpayers and married taxpayers filing separately ($13,850 in 2023), and $21,900 for heads of household ($20,800 in 2023).
Federal tax levies
The Tax Cuts and Jobs Act altered the way the amount of wages, salary, or other income exempt from a federal tax levy is calculated. For taxable years beginning in 2024, the dollar amount used to calculate the amount determined under IRC §6334(d)(4)(B) increases to $5,000 ($4,700 in 2023).
Foreign earned income exclusion
For 2024, the maximum foreign earned income exclusion amount under IRC §911(b)(2)(D)(i) is $126,500 (up from $120,000 in 2023). The maximum amount of the foreign housing cost exclusion is $17,710 (up from $16,800 in 2023).
Medical Savings Accounts
To be eligible to make contributions to a Medical Savings Account (or to have the employer make the contributions), an employee must be covered by a high deductible health plan. For 2024, a high deductible health plan is a plan with an annual deductible of $2,800-$4,150 for individual coverage (up from $2,650-$3,950 in 2023) and $5,550-$8,350 for family coverage (up from $5,300-$7,900 in 2023).
Maximum out-of-pocket expenses can be no more than $5,550 for individual coverage (up from $5,300 in 2023) and $10,200 for family coverage (up from $9,650 in 2023).
Long-term care insurance benefits
If a long-term care insurance contract makes per diem benefit payments, the amount of the payments that is excluded from income in 2024 is capped at $410 per day (down from $420 in 2023).
Adoption assistance
For 2024, the maximum amount that can be excluded from an employee's gross income for qualified adoption expenses under an employer's adoption assistance program or in connection with the adoption of a child with special needs is $16,810 (up from $15,950 in 2023).
The amount excludable from an employee's gross income begins to phase out for taxpayers with adjusted gross income of $252,150 (up from $239,230 in 2023) and is completely phased out for taxpayers with adjusted gross income of $292,150 (up from $279,230 in 2023).
Qualified small employer HRA
For 2024, a qualified small employer health reimbursement arrangement (QSEHRA) is an arrangement which, among other requirements, makes payments and reimbursements for qualifying medical care expenses of an eligible employee that do not exceed $6,150 (up from $5,850 for 2023), or $12,450 in the case of an arrangement that also provides for payments or reimbursements for family members of the employee (up from $11,800 for 2023).
Compliance