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Every year the IRS adjusts more than 60 tax provisions to account for inflation.  The 2019 tax brackets, standard deduction and retirement contribution limits have all been changed.  The adjustments will affect tax returns due on April 15, 2020. Here’s what you need to know.

Tax brackets and rates

The IRS determines your tax liability by dividing your income into different tax brackets.  Each portion of your income is taxed at the matching tax rate.  These are the tax brackets and rates for 2019.

Tax rate Single Head of Household Married Filing Jointly or Qualifying Widow 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

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The standard deduction

For 2019 the standard deduction has increased by $200 for single filers, $350 for head of household and $400 for married couples filing a joint return.

Filing Status Standard Deduction
Single or Married Filing Separately $12,200
Head of Household $18,350
Married Filing Jointly or Qualifying Widow $24,400
  • Individuals who are 65 and older or blind are entitled to an additional standard deduction.  It’s worth $1,300 if you’re married and $1,650 if you’re single.
  • If you can be claimed as a dependent on someone else’s tax return, your standard deduction will be much lower.  It will be $1,100 or your earned income plus $350, whichever is greater.

Retirement contribution limits

This year savers will be able to contribute more money to their retirement accounts.  The contribution limits have increased by $500.  However, catch-up contributions for those age 50 and older remain the same.

IRAs  
Traditional and Roth IRAs for people younger than 50 $6,000
Catch-up IRA contributions for people 50 and older $1,000
Employer-sponsored plans  
401(k), 403(b), 457 and Thrift Savings Plan (TSP) $19,000
Catch-up contributions for people 50 and older $6,000

EITC income limits and credit amounts

To qualify for the Earned Income Tax Credit (EITC) in 2019 your earned income and adjusted gross income (AGI) must be less than:

Filing Status No Children One Child Two Children Three or More Children
Single, Head of Household or Widowed $15,570 $41,094 $46,703 $50,162
Married Filing Jointly $21,370 $46,884 $52,493 $55,952

Your investment income cannot exceed $3,600 for the year.

The maximum credit you can receive is:

  • $529 with no children
  • $3,526 with one child
  • $5,828 with two children
  • $6,557 with three or more children

HSA contribution limits

The IRS gave HSA contribution limits a slight boost, $50 for self-only coverage and $100 for family coverage.  The catch-up contribution limit for those who are 55 and older is $1,000.

  HSA Contribution Limit Minimum Deductible Maximum Out-of-Pocket
Single $3,500 $1,350 $6,750
Family $7,000 $2,700 $13,500

Alternative Minimum Tax (AMT)

The Alternative Minimum Tax (AMT) was designed to keep wealthier taxpayers from claiming an excessive amount of tax breaks.  High-income earners must calculate their taxable income using the regular tax system and the AMT.  The higher amount is the one they’re expected to pay.  However, the IRS does allow you to exempt a portion of your income from the AMT calculation.

Filing Status Exemption Amount Exemption Phaseout
Single $71,700 $510,300
Married Filing Jointly $111,700 $1,020,600