The IRS announced (Rev. Proc. 2016-14) updated 2016 inflation
adjustment for items affected by the Protecting Americans from Tax
Hikes (PATH) Act of 2015.
The IRS typically releases inflation adjustments in October, but
the PATH Act’s enactment in December changed several
provisions that require new adjustments. (See
Tax Flash 2015-06 for a full list of the October inflation
adjustments.)
The PATH Act permanently set the Section 179 expensing limit at
$500,000 and the start of the phase-out threshold at $2 million,
but indexed these figures for inflation starting in 2016. Rev.
Proc. 2016 provides that the Section 179 expensing limit will
remain $500,000 for 2016, but the phase-out threshold will increase
to $2.01 million. The qualified fringe benefit for transit or a
commuter highway vehicle was retroactively increased from $130 to
$250 for 2015 and increases to $255 in 2016. The above-the-line
deduction for qualified teaching expenses was also made permanent
and indexed for inflation, but will remain at $250 in 2016
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