How Much Will You Be Paying in Taxes This Year? 2019-2020 Tax Rates

How Much Will You Be Paying in Taxes This Year? 2019-2020 Tax Rates


in Tax Info
How Much Will You Be Paying in Taxes This Year? 2019-2020 Tax Rates

The Tax Cuts and Jobs Act made some of the largest changes to the tax code we’ve seen in recent history. While the majority of these changes went into effect for the 2018 tax year (so you would have noticed them when you did your taxes in 2019), the tax code does change slightly each year per TJCA changes. Then, the tax brackets also change each year, as always, since they are tied to inflation. So what does this mean for your taxes? How much will you be paying in taxes this year?

Below, we’re taking a closer look at some of the most important things you need to know for your taxes this year. We’ll take a look at some important figures for the 2019 tax year, which you’ll pay taxes for in 2020. Then, we’ll also take a look at some of the new figures the IRS recently released for the 2020 tax year, which can help you (or your tax preparer) plan accordingly as we start the new year.

This Year in Taxes: Income Tax Rates

We’ll start with the 2019 and 2020 income tax rates. The Tax Cuts and Jobs Act changed the standard tax brackets. There are still seven brackets, but the rate for each has generally lowered. Then, the tax bracket thresholds increased.

The tax rates have stayed the same since they were implemented for the 2018 tax year. However, the brackets have changed, as they are tied to inflation. Tax brackets had previously been tied to the CPI-U, an index that tracks certain goods and services that affect typical American households. With the implementation of the Tax Cuts and Jobs Act, however, tax bracket inflation amounts are now measured using Chained CPI, an index that grows at a slightly slower rate over time than CPI-U. The IRS has released the official CPI adjusted tax brackets for the 2019 and 2020 tax years, which are listed below.

Tax Rates: 2019 Calendar Year (For Taxes Due in April 2020)

Tax Rate Single Married Filing Jointly Married Filing Separately Head of Household
10% $0 to $9,700 $0 to $19,400 $0 to $9,700 $0 to $13,850
12% $9,701 to $39,475 $19,401 to $78,950 $9,701 to $39,475 $13,851 to $52,850
22% $39,476 to $84,200 $78,951 to $168,400 $39,476 to $84,200 $52,851 to $84,200
24% $84,201 to $160,725 $168,401 to $321,450 $84,201 to $160,725 $84,201 to $160,700
32% $160,726 to $204,100 $321,451 to $408,200 $160,726 to $204,100 $160,701 to $204,100
35% $204,101 to $510,300 $408,201 to $612,350 $204,101 to $306,175 $204,101 to $510,300
37% $510,301 or more $612,351 or more $306,176 or more $510,301 or more

2020 Calendar Year (For Taxes Due in April 2021)

Tax Rate Single Married Filing Jointly Married Filing Separately Head of Household
10% $0 to $9,875 $0 to $19,750 $0 to $9,875 $0 to $14,100
12% $9,876 to $40,125 $19,751 to $80,250 $9,876 to $40.125 $14,101 to $53,700
22% $40,126 to $85,545 $80,251 to $171,050 $40,126 to $85,545 $53,701 to $85,500
24% $85,526 to $163,300 $171,051 to $326,600 $85,526 to $163,300 $85,501 to $163,300
32% $163,301 to $207,350 $326,601 to $414,700 $163,301 to $207,350 $163,301 to $207,350
35% $207,351 to $518,400 $414,701 to $622,050 $207,351 to $311,025 $207,351 to $518,400
37% $518,401 or more $622,051 or more $311,026 or more $518,401 or more

This Year in Taxes: Standard Deduction Amounts

The Tax Cuts and Jobs Act made an enormous change to the standard deduction. This amount is now nearly doubled, which means many more taxpayers will likely use the standard deduction rather than itemizing their tax deductions.

Like the new tax brackets, the standard deduction is tied to inflation. Below are the official IRS standard deduction amounts for the 2019 and 2020 tax years, adjusted for inflation.

Standard Deduction for the 2019 Calendar year (For Taxes Due in April 2020)

Filing Status 2019 Standard Deduction
Single or Married Filing Separately $12,200
Married Filing Jointly $24,400
Head of Household $18,350

Standard Deduction fro the 2020 Calendar Year (For Taxes Due in April 2021)

Filing Status 2019 Standard Deduction
Single or Married Filing Separately $12,400
Married Filing Jointly $24,800
Head of Household $18,650

This Year in Taxes: No More Affordable Care Act Penalties

While many of the Tax Cuts and Jobs Act changes went into effect for the 2018 tax year, this change is new for 2019. Starting in the 2019 tax year, there will be no more federal tax penalty fees for those who did not have health insurance during all or part of the year.

This Year in Taxes: Health Savings Accounts

Health savings accounts have also changed from 2018 due to inflation. For the 2019 tax year, you can add $3,500 to individual health savings accounts or $7,000 to family plans. For the 2020 tax year, you can add a bit more: the 2020 maximum for individuals is $3,550 and the 2020 maximum for family plans is $7,100.

This Year in Taxes: Estate Tax Exemption Amounts

The Tax Cuts and Jobs Act dramatically increased the estate tax exemption amount. Before this law was passed, the exemption amount was $5.59 million. This figure jumped to $11.18 million for the 2018 tax year and it is set to increase with inflation each year. The 2019 tax year estate tax exemption amount is $11.4 million, while the 2020 tax year amount is $11.58.