United States

Rev. Proc. 2016-55 provides 2017 amounts for inflation-adjusted items


In Rev. Proc. 2016-55, the IRS provides the 2017 amounts for inflation-adjusted items. The 55 items listed cover individual tax, business tax and penalties.  

The Protecting Americans from Tax Hikes (PATH) Act of 2015 (see our article, Generous tax extenders package enacted, with many provisions made permanent) made permanent the business asset expensing provisions of section 179 and further indexed the amounts for inflation. For the 2016 tax year, the amount a taxpayer can elect to expense up to $500,000 of qualified property. The $500,000 is subject to a phase-out beginning at $2 million of section 179 eligible property placed into service in that tax year. Rev. Proc. 2016-55 increases the 2017 expensing amount to $510,000 with a phase-out beginning at $2,030,000 of section 179 property placed into service in the tax year.

As a reminder, the PATH Act also removed the limitation to the amount of qualified real property that can be expensed under section 179. For a tax year beginning before Dec. 31, 2015, a taxpayer could expense up to $250,000 of qualified real property under section 179. For tax years beginning after Dec. 31, 2015, a taxpayer can expense qualified real property up to the full section 179 amount in effect for that tax year.

Rev. Proc. 2016-55 provides additional inflation-adjusted amounts for the following business tax items:

  1. Employee Health Insurance Expense of Small Employers
  2. Cafeteria Plans
  3. Qualified Transportation Fringe Benefit
  4. Medical Savings Accounts
  5. Failure to File Penalties

The PATH Act provided certainty to the expensing provisions of section 179. Now that the amounts are indexed for inflation, taxpayers and their advisors should watch for the IRS inflation-adjusted amounts each year to assist with year-end and future tax planning.


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