Several changes to the federal income tax laws go into effect in 2015. The change that you have most likely heard about is part of the “Patient Protection and Affordable Care Act,” 2010 legislation requiring all Americans to have health insurance. This law imposes a penalty for people who do not have health insurance, which for 2014 was equal to the greater of $95.00 per person or 1% of household income. For 2015 this penalty increases to the greater of $325.00 per person or 2% of household income. Someone not covered by an employer-sponsored health plan, Medicaid, Medicare or other public insurance program is required to have coverage under a private insurance plan in order to avoid being penalized.Exceptions exist for financial hardship and members of recognized religious sects exempted by the Internal Revenue Service.Subsidies are also available for low-income individuals.
Other health expense-related income tax changes occur in 2015. If you save pre-tax dollars in your employer’s Flexible Spending Account (“FSA”) to pay for healthcare expenses, and roll over amounts into the next FSA plan year, you might be ineligible to participate ina Health Savings Account (“HSA”). (The HSA is a medical savings account for someone whose health plan has a certain high-level plan deductible; contributions are excluded from income for tax purposes.) The annual limit on FSAs has been increased $50.00 from 2014 to $2,550.00 for 2015.
If you participate in a “401(k)” plan at work you might be able to increase the amount of your elective deferrals in 2015. The limit has been increased by $500.00 from 2014 and now stands at $18,000.00 per year. For older participants (at least age 50 years) in 401(k) and certain other elective-deferral plans, extra “catch-up” contributions can be made. This annual amount, which was $5,500.00 for 2014, has been increased to $6,000.00 for 2015.
Finally, the following all experience slight increases for 2015: standard deduction amounts, incomethresholds for the highest tax bracket,income limits for deductible contributions to individual retirement accounts(“IRAs”) and alternative minimum tax (“AMT”) exemption amounts have.