© 2024 American Payroll Institute, Inc.
November 1, 2024 Volume 32 Issue 11
IRS Announces 2025 COLAs for Transportation Fringes, FSA Deferrals
The IRS released cost-of-living adjustments (COLAs) for
2025 reflecting any increases in the flexible spending
arrangements (FSA) deferral limit, foreign earned income
exclusion, and excludable transportation fringes, among
other changes [Rev. Proc. 2024-40, 10-22-24].
Qualified transportation fringes
The amounts that may be excluded from gross income
for employer-provided qualified transportation fringe
benefits (transportation in a commuter highway vehicle
and any transit pass) and qualified parking for 2025 increase
to $325 ($315 in 2024).
Health FSAs
For plan years beginning in 2025, the dollar limitation
under IRC §125(i) on voluntary employee salary reductions
for contributions to health FSAs increases to $3,300 ($3,200
in 2024). For cafeteria plans that permit the carryover of
unused amounts, the maximum carryover amount increases
to $660 ($640 in 2024).
Standard deduction
The standard deduction amounts for 2025 increase
to $30,000 for married couples filing jointly or surviving
spouses ($29,200 in 2024), $15,000 for single taxpayers and
married taxpayers filing separately ($14,600 in 2024), and
$22,500 for heads of household ($21,900 in 2024).
Federal tax levies
The Tax Cuts and Jobs Act altered the way the amount
of wages, salary, or other income exempt from a federal tax
levy is calculated. For taxable years beginning in 2025, the
dollar amount used to calculate the amount determined
under IRC §6334(d)(4)(B) increases to $5,100 ($5,000 in
2024).
Foreign earned income exclusion
For 2025, the maximum foreign earned income
exclusion amount under IRC §911(b)(2)(D)(i) is $130,000
(up from $126,500 in 2024). The maximum amount of the
foreign housing cost exclusion is $18,200 (up from $17,710
in 2024).
Medical Savings Accounts
To be eligible to make contributions to a Medical Savings
Account (or to have the employer make the contributions),
an employee must be covered by a high deductible health
plan. For 2025, a high deductible health plan is a plan with an
annual deductible of $2,850-$4,300 for individual coverage
(up from $2,800-$4,150 in 2024) and $5,700-$8,550 for family
coverage (up from $5,550-$8,350 in 2024).
Maximum out-of-pocket expenses can be no more than
$5,700 for individual coverage (up from $5,550 in 2024) and
$10,500 for family coverage (up from $10,200 in 2024).
Long-term care insurance benefits
If a long-term care insurance contract makes per diem
benefit payments, the amount of the payments that is
excluded from income in 2025 is capped at $420 per day (up
IRS Announces 2025 COLAs for Transportation Fringes, FSA
Deferrals............................................................................................ 1
Social Security Wage Base Increases to $176,100 for 2025..... 2
IRS Issues Guidance on Plans for Long-Term, Part-Time
Employees......................................................................................... 3
IRS Continues Processing ERC Claims, Sending Refund
Checks................................................................................................ 3
IRS Updates Specifications for Substitute Forms W-2c, W-3c..... 4
IRS Revises EFTPS Instruction Booklet............................................ 4
Daylight Saving Time Ends November 3....................................... 4
IRS to Hold Hearing on Payment Proposal for Debit, Credit
Cards. .................................................................................................5
ARB Enforces Higher Penalty Against Employer for FLSA
Violations.......................................................................................... 5
5th Circuit Affirms Overtime Exemption for HCEs. .....................6
4th Circuit Rules Firing for Medical Paperwork Did Not
Violate FMLA.................................................................................... 7
IRS Creates Tax Tip for Disaster Recovery...................................... 8
Nacha Requests Comments on ACH Rules................................... 9
TIGTA Publishes ERC Audit Report................................................... 9
USCIS Announces E-Verify Records Retention and Disposal
Schedule..........................................................................................10
USCIS Promotes E-Verify+ to Employers With Video................10
Payroll Solutions. ...............................................................................11
USCIS Updates E-Verify Employer Search Tool. .........................11
3rd Circuit Rules Claims for Wage Violations Excluded From
Insurance........................................................................................11
Court Rules No FMLA Leave Required for Expectant Father.....12
IRS Releases 2022 Tax Gap Projections. .......................................13
Update on Employment Tax Enforcement Actions..................14
State and Local Highlights...............................................................15
IRS Explains Federal Tax Relief Due to Natural Disasters. ...17
California to Require EWA Providers to Register With State.... 17
PayrollOrg Supports Consistent Pay Transparency in D.C.
Metro Area................................................................................. 18
November 1, 2024 Volume 32 Issue 11
IRS Announces 2025 COLAs for Transportation Fringes, FSA Deferrals
The IRS released cost-of-living adjustments (COLAs) for
2025 reflecting any increases in the flexible spending
arrangements (FSA) deferral limit, foreign earned income
exclusion, and excludable transportation fringes, among
other changes [Rev. Proc. 2024-40, 10-22-24].
Qualified transportation fringes
The amounts that may be excluded from gross income
for employer-provided qualified transportation fringe
benefits (transportation in a commuter highway vehicle
and any transit pass) and qualified parking for 2025 increase
to $325 ($315 in 2024).
Health FSAs
For plan years beginning in 2025, the dollar limitation
under IRC §125(i) on voluntary employee salary reductions
for contributions to health FSAs increases to $3,300 ($3,200
in 2024). For cafeteria plans that permit the carryover of
unused amounts, the maximum carryover amount increases
to $660 ($640 in 2024).
Standard deduction
The standard deduction amounts for 2025 increase
to $30,000 for married couples filing jointly or surviving
spouses ($29,200 in 2024), $15,000 for single taxpayers and
married taxpayers filing separately ($14,600 in 2024), and
$22,500 for heads of household ($21,900 in 2024).
Federal tax levies
The Tax Cuts and Jobs Act altered the way the amount
of wages, salary, or other income exempt from a federal tax
levy is calculated. For taxable years beginning in 2025, the
dollar amount used to calculate the amount determined
under IRC §6334(d)(4)(B) increases to $5,100 ($5,000 in
2024).
Foreign earned income exclusion
For 2025, the maximum foreign earned income
exclusion amount under IRC §911(b)(2)(D)(i) is $130,000
(up from $126,500 in 2024). The maximum amount of the
foreign housing cost exclusion is $18,200 (up from $17,710
in 2024).
Medical Savings Accounts
To be eligible to make contributions to a Medical Savings
Account (or to have the employer make the contributions),
an employee must be covered by a high deductible health
plan. For 2025, a high deductible health plan is a plan with an
annual deductible of $2,850-$4,300 for individual coverage
(up from $2,800-$4,150 in 2024) and $5,700-$8,550 for family
coverage (up from $5,550-$8,350 in 2024).
Maximum out-of-pocket expenses can be no more than
$5,700 for individual coverage (up from $5,550 in 2024) and
$10,500 for family coverage (up from $10,200 in 2024).
Long-term care insurance benefits
If a long-term care insurance contract makes per diem
benefit payments, the amount of the payments that is
excluded from income in 2025 is capped at $420 per day (up
IRS Announces 2025 COLAs for Transportation Fringes, FSA
Deferrals............................................................................................ 1
Social Security Wage Base Increases to $176,100 for 2025..... 2
IRS Issues Guidance on Plans for Long-Term, Part-Time
Employees......................................................................................... 3
IRS Continues Processing ERC Claims, Sending Refund
Checks................................................................................................ 3
IRS Updates Specifications for Substitute Forms W-2c, W-3c..... 4
IRS Revises EFTPS Instruction Booklet............................................ 4
Daylight Saving Time Ends November 3....................................... 4
IRS to Hold Hearing on Payment Proposal for Debit, Credit
Cards. .................................................................................................5
ARB Enforces Higher Penalty Against Employer for FLSA
Violations.......................................................................................... 5
5th Circuit Affirms Overtime Exemption for HCEs. .....................6
4th Circuit Rules Firing for Medical Paperwork Did Not
Violate FMLA.................................................................................... 7
IRS Creates Tax Tip for Disaster Recovery...................................... 8
Nacha Requests Comments on ACH Rules................................... 9
TIGTA Publishes ERC Audit Report................................................... 9
USCIS Announces E-Verify Records Retention and Disposal
Schedule..........................................................................................10
USCIS Promotes E-Verify+ to Employers With Video................10
Payroll Solutions. ...............................................................................11
USCIS Updates E-Verify Employer Search Tool. .........................11
3rd Circuit Rules Claims for Wage Violations Excluded From
Insurance........................................................................................11
Court Rules No FMLA Leave Required for Expectant Father.....12
IRS Releases 2022 Tax Gap Projections. .......................................13
Update on Employment Tax Enforcement Actions..................14
State and Local Highlights...............................................................15
IRS Explains Federal Tax Relief Due to Natural Disasters. ...17
California to Require EWA Providers to Register With State.... 17
PayrollOrg Supports Consistent Pay Transparency in D.C.
Metro Area................................................................................. 18
