FICA base — Annual compensation to which Social Security tax applies is $127,200 for 2017 (up from $118,500 for 2016).
Social Security benefits — Individuals who are drawing Social Security benefits prior to attaining full retirement age will begin to suffer reductions in payments if they have earned income exceeding $16,920 in 2017, up from $15,720 in 2016.
Adjustments for retirement accounts — The maximum annual addition to a defined contribution plan is increased to $54,000 for 2017 (up from $53,000 in 2016). The maximum amounts that individuals can elect to contribute to employer-sponsored plans and IRAs for 2017, as shown below, are unchanged from 2016:
Year | IRAs | SIMPLE IRA Plans | Other Employer Plans | |||
---|---|---|---|---|---|---|
Annual Contribution | Catch-Up Contribution | Elective Deferral | Catch-Up Contribution | Elective Deferral | Catch-Up Contribution | |
2017 | $5,500 | $1,000 | $12,500 | $3,000 | $18,000 | $6,000 |
The maximum amount of compensation that can be considered as the base for retirement plan contributions is $270,000 for 2017 (up from $265,000 for 2016).
Health savings accounts — The limits on contribution deductions for 2017 are $3,400 for self-only coverage (up $50) and $6,750 for family coverage (no change). The additional “catch-up” contribution allowable for those age 55 or older remains $1,000.
Health flexible spending arrangements — The maximum voluntary employee salary reduction for employer-adopted FSAs (flexible spending arrangements) is $2,600 for 2017 (up $50).
Section 179 deduction — The maximum Section 179 deduction for 2017 is $500,000, subject to a dollar-for-dollar phase-out range of $2,000,000 to $2,500,000 of qualifying property purchases in the year.
Estate tax — Federal estate and gift taxes apply to cumulative taxable transfers exceeding $5,490,000 in 2017, up from $5,450,000 in 2016.
Gift taxes — The annual exclusion for gifts per donee remains $14,000 for 2017.
Nanny tax — Cash wages paid for domestic service in the employer’s home of less than $2,000 remain not subject to FICA in 2017.