IRS Reduces Some Tax-Related Limits for 2018

Payroll on Bloomberg Tax is built to get you to the right answer faster and more efficiently. Get all the payroll intelligence you need with Bloomberg Tax expert analysis, perspectives and...

By Michael Trimarchi

Cost-of-living adjustments were reduced for 2018 limits applied to health savings accounts, adoptions, and foreign earned income, the Internal Revenue Service said March 5 in Revenue Procedure 2018-18.

The revisions, which were made because of amendments to the Internal Revenue Code under the new federal tax code (Pub. L. 115-97), were retroactive to Jan. 1. The changed amounts were released in Internal Revenue Bulletin 2018-10.

Health savings accounts: The maximum amount of tax-free contributions for covered benefits allowed for family coverage under a high-deductible health plan is $6,850, down from $6,900. The maximum amount of tax-free contributions for covered benefits allowed for individual HSAs remains $3,450.

Adoption assistance: The credit allowed for expenses related to adoption assistance is $13,810, down from $13,840.

Foreign earned-income exclusion: The maximum amount of foreign-earned income that a U.S. citizen or resident living and working abroad may exclude for tax purposes in 2018 is $103,900, down from $104,100. The exclusion may be taken provided the individual qualifies under Internal Revenue Code Section 911 requirements.

Information-reporting penalty: The maximum penalty for filing incorrect information returns with the IRS and correcting them within 30 days was reduced to $545,500 from $547,000.

To contact the reporter on this story: Michael Trimarchi in Washington at To contact the editor responsible for this story: Michael Baer at

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Payroll