4 states to decide tax ballot measures today
Standard & itemized tax deductions for the 2020 tax year

2020 income tax rates and inflation-adjusted tax brackets

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Image by Gerd Altmann from Pixabay

This is the first in a 10-part series on how major tax provisions are affected by inflation. The Internal Revenue Service released all these figures today, Nov. 6, 2019.

True, the figures are key in 2020 tax planning, which you should be doing now along with making 2019 year-end tax moves. But since they are for next year, there's not a lot of urgency to get them all out all at once. Patience, I've discovered over the years, works well with taxes as it does most things in life.

Plus, I've always viewed our enormous Internal Revenue Service as an elephant. And as the proverb goes, you consume something that large one bite at a time.

Since the just-released IRS inflation figures cover more than 60 tax provisions in a 28-page Revenue Procedure, I'm doing this year what I've done for years here at the ol' blog. I'm parceling out these 2020 tax inflation numbers in separate posts over the next 10 days.

This 10-part series also will give me a chance to elaborate a bit more on each tax area. You'll also find that I'll also show what the 2019 amounts are, not only for your current tax use, but also to see how much or little change is made. If you're a tax geek like me, you like to savor these types of details for each tax portion.

If, however, you view taxes as necessary annual evil and just what the tax facts, ma'am, then the series approach means you won't be hit all at once with a gigantic TL;DR post. You can read or bookmark just those areas that apply to your personal tax situation.

OK, enough preface. Here's the first 2020 tax inflation installment focusing on next year's individual income tax brackets.

The more tax things change, the more numbers we get: The Tax Cuts and Jobs Act (TCJA) that was enacted in 2017 made lots of changes, including new tax rates and new amounts of income to which these rates apply.

Then came the Taxpayer First Act of 2019, which also mandates some tax code changes.

But one thing all this continual Congressional tinkering didn't change was the bumping up of the income tax brackets each year thanks to inflation.

Part 1 of the 2020 tax inflation series looks at coming changes to what most filers find the most important— the income tax rates and just how much of our earnings falls into each of these brackets.

2020 income in the 7 tax brackets: As we know after this first tax filing season under the TCJA, the tax reform bill kept the number of tax rates at seven, but lowered most of them.

The table below shows what the rates will be for 2020 and what income amounts fall into those tax brackets.

2020 tax rates and income brackets
YOU WILL USE THESE TAX RATES AND INCOME BRACKETS 
WHEN COMPLETING YOUR 2020 TAX RETURN TO BE FILED IN 2021.

 Tax
 Rate

 Single

 Head of
 Household

 Married
 Filing Jointly or
 Surviving Spouse

 Married
 Filing
 Separately

 10%

 Up to $9,875

 Up to $14,100

 Up to $ 19,750

 Up to $9,875

 12%

 $9,876 to 
 $40,125

 $14,101 to 
 $53,700

 $19,751 to
 $80,250

 $9,876 to
 $40,125

 22%

 $40,126 to 
 $85,525

 $53,701 to
 $85,500

 $80,251 to
 $171,050

 $40,126 to
 $85,525

 24%

 $85,526 to 
 $163,300

 $85,501 to
 $163,300

 $171,051 to
 $326,600

 $85,526 to
 $163,300

 32%

 $163,301 to
 $207,350

 $163,301 to
 $207,350

 $326,601 to
 $414,700

 $163,301 to
 $207,350

 35%

 $207,351 to
 $518,400

 $204,101 to
 $518,400

 $414,701 to
 $622,050

 $207,351 to
 $311,025

 37%

 $518,401 
 or more

 $518,401
 or more

 $622,051
 or more

 $311,026 
 or more


As promised (threatened), here's a look, too, at the current tax rates and income brackets to which they apply. That info is in the table below.

2019 tax rates and income brackets
USE THESE TAX RATES AND INCOME BRACKETS 
WHEN COMPLETING YOUR 2019 TAX RETURN TO BE FILED IN 2020.

 Tax
 Rate

 Single

 Head of
 Household

 Married
 Filing Jointly or
 Surviving Spouse

 Married
 Filing
 Separately

 10%

 Up to $9,700

 Up to $13,850

 Up to $19,400

 Up to $9,700

 12%

 $9,701 to 
 $39,475

 $13,851 to 
 $52,850

 $19,401 to
 $78,950

 $9,701 to
 $39,475

 22%

 $39,476 to 
 $84,200

 $52,851 to
 $84,200

 $78,951 to
 $168,400

 $39,476 to
 $84,200

 24%

 $84,201 to 
 $160,725

 $84,201 to
 $160,700

 $168,401 to
 $321,450

 $84,201 to
 $160,725

 32%

 $160,726 to
 $204,100

 $160,701 to
 $204,100

 $321,451 to
 $408,200

 $160,726 to
 $204,100

 35%

 $204,101 to
 $510,300

 $204,101 to
 $510,300

 $408,201 to
 $612,350

 $204,101 to
 $306,175

 37%

 $510,301 
 or more

 $510,301
 or more

 $612,351
 or more

 $306,176 
 or more


If you just haven't had enough tax numbers, you also can check out the ol' blog's special page lets you look back at tax rates and income brackets through the years.

2020 vs. 2019 numbers: I want to take a minute here to reiterate a key consideration in your excitement about these new figures. The tax year 2020 adjustments shown in this post and particularly in the first table are the figures to be used on tax returns you will file in 2021. 

Not next year's filing of your 2019 taxes. But 2020 tax returns filed in 2021.

Do not get confused and use the 2020 inflation data to calculate what you'll likely owe the 2019 tax year when you file that return in 2020.

Yeah, tax year data overlap is a total pain in the tax tukas, especially as we're looking this time of year at ways to lower our current tax year's potential bill.

Still, it's good to have the 2020 data as soon as possible. It's critical for more accurate tax planning purposes.

So my advice is to note this post — and the nine other inflation adjustment posts that will follow — and perhaps bookmark it/them. That way, when it comes time next year to make some tax decisions, you can come back and recheck the dollar limits for 2020.

But wait, there's more: Again, as promised (threatened) I'll be back tomorrow (and the ensuing days) with more inflation adjusted tax changes for next tax year.

You can get a preview of what's coming down the ol' blog road in the 2020 tax year inflation series directory below. When those posts go live, I'll add the links here. This first post is linked in the index.

You'll also see another live link in the coming medical tax inflation category (#5 below). The IRS announced 2020 inflation amounts for high deductible health plans and associated health savings accounts earlier this year.

Coming up next, though, is the always popular standard deduction amounts that were greatly increased under the TCJA. It's not too much of a spoiler to say those amounts, like the income brackets in today's 2020 inflation series opener, will be bumped up a bit, too.

  1. 2020 tax rates and income brackets
  2. Standard deduction, personal exemptions and itemized deduction limits
  3. Retirement, pension plan contribution limits
  4. Credits, deductions and income exclusions (Includes adoption costs, 199A, educational tax breaks for both students and teachers, Earned Income Tax Credit and more)
  5. Medical-related tax provisions, including contributions to a flexible spending account, health savings account, medical savings account and deductible long-term care policy premiums
  6. Capital gains, estate and gift tax limits, kiddie tax, trusts and estates
  7. Alternative Minimum Tax exemption amounts and 2020 Social Security wage base
  8. International worker tax issues (foreign income, housing exclusions)
  9. Penalties, for individuals, businesses and tax pros, for failing to meet tax filing and reporting requirements
  10. Standard mileage deduction rates (issued separately, and later, by the IRS)

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