Beginning on Jan. 1, 2020, the Internal Revenue Service (IRS) has new annual inflation adjustments for tax rates, brackets, deductions and retirement contribution limits. Note, the amounts below do not impact the tax filing you make in 2020 for the tax year 2019. These amounts apply to your 2020 taxes that you will file in 2021.
2020 Tax Rates and 2020 Tax Brackets
Below are the new 2020 tables for personal income tax rates. There are separate tables each for individuals, married filing jointly couples and surviving spouses, heads of household and married filing separate; all with seven tax brackets for 2020.
Tax Brackets & Rates – Individuals | |
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Taxable Income Between | Tax Due |
$0 – $9,875 | 10% |
$9,876 – $40,125 | $988 plus 12% of the amount over $9,875 |
$40,126 – $85,525 | $4,617 plus 22% of the amount over $40,125 |
$85,526 – $163,300 | $14,605 plus 24% of the amount over $85,525 |
$163,301 – $207,350 | $33,271 plus 32% of the amount over $163,300 |
$207,351 – $518,400 | $47,367 plus 35% of the amount over $207,350 |
$518,400 and Over | $156,234 plus 37% of the amount over $518,400 |
Tax Brackets & Rates – Married Filing Jointly and Surviving Spouses | |
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Taxable Income Between | Tax Due |
$0 – $19,750 | 10% |
$19,751 – $80,250 | $1,975 plus 12% of the amount over $19,750 |
$80,251 – $171,050 | $9,235 plus 22% of the amount over $80,250 |
$171,051 – $326,600 | $29,211 plus 24% of the amount over $171,050 |
$326,601 – $414,700 | $66,542 plus 32% of the amount over $326,600 |
$414,701 – $622,050 | $94,734 plus 35% of the amount over $414,700 |
$622,050 and Over | $167,306 plus 37% of the amount over $622,050 |
Tax Brackets & Rates – Heads of Households | |
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Taxable Income Between | Tax Due |
$0 – $14,100 | 10% |
$14,101 – $53,700 | $1,410 plus 12% of the amount over $14,100 |
$53,701 – $85,500 | $6,162 plus 22% of the amount over $53,700 |
$85,501 – $163,300 | $13,158 plus 24% of the amount over $85,500 |
$163,301 – $207,350 | $31,829 plus 32% of the amount over $163,300 |
$207,351 – $518,400 | $45,925 plus 35% of the amount over $207,350 |
$518,400 and Over | $154,792 plus 37% of the amount over $518,400 |
Tax Brackets & Rates – Separately | |
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Taxable Income Between | Tax Due |
$0 – $9,875 | 10% |
$9,876 – $40,125 | $988 plus 12% of the amount over $9,875 |
$40,126 – $85,525 | $4,617 plus 22% of the amount over $40,125 |
$85,526 – $163,300 | $14,605 plus 24% of the amount over $85,525 |
$163,301 – $207,350 | $33,271 plus 32% of the amount over $163,300 |
$207,351 – $311,025 | $47,367 plus 35% of the amount over $207,350 |
$311,025 and Over | $83,653 plus 37% of the amount over $311,025 |
Trusts and Estates have four brackets in 2020, each with different rates.
Tax Brackets & Rates – Trusts and Estates | |
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Taxable Income Between | Tax Due |
$0 – $2,600 | 10% |
$2,601 – $9,450 | $260 plus 12% of the amount over $2,600 |
$9,451 – $12,950 | $1,904 plus 35% of the amount over $9,450 |
$12,950 and Over | $3,129 plus 37% of the amount over $12,950 |
Standard Deduction Amounts
Amounts for standard deductions see a slight increase from 2019 to 2020 based on indexing for inflation. Note that again as in 2019, there are no personal exemption amounts for 2020.
Standard Deductions | |
---|---|
Filing Status | Standard Deduction Amount |
Single | $12,400 |
Married Filing Jointly & Surviving Spouses | $24,800 |
Married Filing Separately | $12,400 |
Heads of Household | $18,650 |
Alternative Minimum Tax (AMT) Exemptions
Like the above, the AMT exemption amounts are increased based on adjustments for inflation, with the 2020 exemption amounts as follows.
Alternative Minimum Tax (AMT) Exemptions | |
---|---|
Filing Status | Standard Deduction Amount |
Individual | $72,900 |
Married Filing Jointly & Surviving Spouses | $113,400 |
Married Filing Separately | $56,700 |
Trusts and Estates | $25,400 |
Capital Gains Rates
Capital gains rates remain unchanged for 2020; however, the brackets for the rates are changing. Taxpayers will pay a maximum 15 percent rate unless their taxable income exceeds the 37 percent threshold (see the personal tax brackets and rates above for your individual situation). If a taxpayer hits this threshold, then their capital gains rate increases to 20 percent.
Itemized Deductions
Below are the 2020 details on the major itemized deductions many taxpayers take on Schedule A of their returns.
Retirement Account Contribution Limits
Finally, we look at the various retirement account contribution limits for 2020.
Conclusion
There are no dramatic changes in the rates, brackets, deductions or retirement account contribution limits that the vast majority taxpayers tend to encounter for 2020 versus 2019. Most changes are simply adjustments for inflation. Enjoy the stability – as history has shown, it likely won’t last long.
Disclaimer