The Internal Revenue Service (IRS) released its annual inflation adjustments for many tax benefits applicable for tax year 2018 (returns filed in 2019). The standard deduction for taxpayers who are married filing jointly will increase slightly to $13,000; for single and separately filing married taxpayers, the standard deduction will also increase slightly, to $6,500. For tax year 2018, the foreign earned income exclusion is $104,100, up from $102,100 for tax year 2017. The annual exclusion for gifts increased to $15,000, an increase of $1,000 from the exclusion for tax year 2017.
More information on tax return benefits can be found in Rev. Proc. 2017-58.
The IRS also announced cost of living adjustments related to pension plans and retirement contributions. For tax year 2018, employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan can contribute up to $18,500, an increase of $500 from tax year 2017. The limit on annual contributions to IRAs remains unchanged from the 2017 level, at $5,500.
For more information on adjustments to retirement-related limitations, read IRS Notice 2017-64.