What Are the Income Tax Brackets for 2020 vs. 2019?

Tax planning is all about thinking ahead. So, now that the IRS has released the new tax brackets for the 2020 tax year, you'll (and should) start brooding about the way to handle your 2020 finances during a tax-efficient way—even though you haven't filed your 2019 income tax return yet. The 2020 tax rates themselves didn't change. They're an equivalent because the seven tax rates in effect for the 2019 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. However, the income bracket ranges were adjusted, or "indexed," to account for inflation.

2020 Tax Brackets for Single/Married Filing Jointly

One other thing to notice is that Congress recently changed the indexing method wont to adjust the tax brackets for inflation. Before 2019, the quality Consumer price level was wont to adjust the brackets. However, some economists believed that formula didn't fully account for changes in spending as prices rise. As a result, the 2017 tax reform law adopted the "chained" CPI formula that the IRS now uses.

Chained indexing generally leads to lower inflation adjustments to the tax brackets annually, which successively means you'll end up during a higher income bracket on your next return. Why? If your income increases faster than the speed of inflation, you ultimately move up to a better bracket. Since the IRS is using lower inflation adjustments, then the probabilities that your income will grow faster than the IRS's rate of inflation rise.

The federal "marriage penalty" also still exists—barely. This tax-law twist makes certain couples—typically, those whose incomes are similar—filing a tax return pay more tax than they might if they were single. It's triggered when, for any given rate, the minimum taxable income for joint filers is a smaller amount than twice the quantity for single filers. Before the 2017 tax reform law, this happened within the four highest tax brackets. Now, however, only the highest federal income bracket contains the wedding penalty trap. As a result, only couples with a combined taxable income over $622,050 are in danger when filing their 2020 federal income tax return.


Standard Deduction and private Exemptions

The standard deduction amounts are adjusted for inflation, too. For joint filers, the 2020 standard deduction is $400 quite the 2019 amount. It goes up $200 in 2020 for single filers and married taxpayers filing a separate return. For heads of households, the quality deduction jumps $300 for 2020.

As in 2019, personal exemption deductions aren't allowed for 2020. They were eliminated by the 2017 tax reform law.

By the way, it is often an honest idea to see your tax withholding each year—especially, if you're getting into a special income bracket or experience another significant shift in your financial situation. search for changes to how withholding amounts are computed starting in 2020, but within the meantime we've a handy tax withholding calculator which will assist you nail down your withholding for the remainder of 2019. albeit the IRS is changing Form W-4 starting in 2020, if you do not submit a replacement W-4 after 2019, your employer will still use the knowledge from your pre-2020 W-4 to calculate your withholding.