The Internal Revenue Service (IRS) has issued Revenue Procedure 2018-18, which modifies certain 2018 cost-of-living adjustments set forth in prior guidance to reflect statutory changes made by the Tax Cuts and Jobs Act (P.L. 115-97). The changes were prompted under the new law's mandate to use a new index for determining annual inflation changes for certain tax provisions.

The changes in Revenue Procedure 2018-18 include a reduction to the annual deduction limit for Health Savings Accounts (HSAs) under Internal Revenue Code section 223 for an individual with family coverage. The guidance further explains:

SECTION 4. 2018 INFLATION ADJUSTED AMOUNTS FOR HEALTH SAVINGS ACCOUNTS UNDER § 223

Annual contribution limitation. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,450. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,850.

High deductible health plan. For calendar year 2018, a "high deductible health plan" is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

The full text of Revenue Procedure 2018-18 is posted here.

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