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IRS Announces Inflation-Adjusted Standard Deduction Amounts for 2020

Posted by Zinner & Co. Tax Team on Nov 19, 2019 5:09:00 AM
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The IRS issued its annual inflation adjustments for key tax items for the tax year 2020. Among them are new amounts for standard deductions.irs-sign-for-newsletters

For the tax year 2020, the standard deduction for a married couple filing jointly will be raised from $24,400 to 24,800. For single taxpayers and married couples filing separately, the standard deduction will be raised from $12,200 to 12,400. For heads of households, the standard deduction will be $18, 650.

Margin tax rates will change as follows:

  • 37 percent for incomes ≥ $518,400, $622,050 for married couples filing jointly
  • 35 percent for incomes over $207,350, $414,700 for married couples filing jointly
  • 32 percent for incomes over $163,300, $326,600 for married couples filing jointly
  • 24 percent for incomes over $85,525, $171,050 for married couples filing jointly
  • 22 percent for incomes over $40,125, $80,250 for married couples filing jointly
  • 12 percent for incomes over $9,875, $19,750 for married couples filing jointly
  • 10 percent for incomes ≤ $9,875, $19,750 for married couples filing jointly

For tax year 2020, the foreign earned income exclusion is $107,600, an increase from $105,900 for tax year 2019.

Estates of decedents who die during 2020 have a basic exclusion amount of $11,580,000, up from a total of $11,400,000 for 2019.

For tax year 2020, the monthly limitation for the qualified transportation fringe benefit is $270, as is the monthly limitation for qualified parking, up from $265 for tax year 2019.

For the taxable years beginning in 2020, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,750, up $50 from the limit for 2019.

In tax year 2020, for participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,350, the same as for tax year 2019; but not more than $3,550, an increase of $50 from tax year 2019. For self-only coverage, the maximum out-of-pocket expense amount is $4,750, up $100 from 2019. In tax year 2020, for participants with family coverage, the floor for the annual deductible is $4,750, up from $4,650 in 2019; however, the deductible cannot be more than $7,100, up $100 from the limit for tax year 2019. For family coverage, the out-of-pocket expense limit is $8,650 for tax year 2020, an increase of $100 from tax year 2019.

If you have questions about any of the new adjusted tax amounts, or would like to discuss tax planning for 2020, contact us.

 

Topics: Taxes - Individual, deductions, income tax, IRS

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