The IRS issued additional inflation adjustments for 2016, necessitated by the December passage of the Consolidated Appropriations Act, 2016, P.L. 114-113 (Rev. Proc. 2016-14). The limits for the following deductions, which were made permanent under the act, are inflation-adjusted beginning in 2016: the Sec. 179 limits on deducting the costs of depreciable assets; the Sec. 62(a)(2)(D) deduction for educators for education expenses; and Sec. 132(f)(2), which provides parity between expenses for mass transit and parking.
Sec. 179 expenses. The Act retroactively restored and made permanent the $500,000 and $2 million limits on the amount of property that can be currently deducted under Sec. 179. Although both amounts are adjusted for inflation beginning in 2016, the $500,000 deduction amount did not increase, but the $2 million phaseout limit increased to $2,010,000.
Educators’ expenses. For 2016, the deduction for qualified expenses incurred by eligible educators is $250, the same amount it was before it expired and was retroactively restored. Although it is adjusted for inflation, inflation was too low to result in an increase in the limit.
Transit benefits. The inflation-adjusted amount for van pool and transit benefits, which were made equal to the benefits for parking permanently under the Act, is $255, an increase of $5 over 2015.
—Sally P. Schreiber (sschreiber@aicpa.org) is a JofA senior editor.
