IRS Releases Annual Adjustment Numbers for 2019

Learn about significant IRS inflation-adjusted numbers for 2019, including tax brackets, the standard deduction, and other important changes.

Every year, the IRS adjusts tax brackets, the standard deduction, and other important numbers to account for inflation. The 2019 adjustments are bit smaller than they have been in the past because the IRS is using a new measure of inflation (the Chained CPI). This was one of the many changes mandated by the Tax Cuts and Jobs Act (TCJA).

Here are the significant inflation-adjusted numbers for 2019.

Individual Tax Brackets

The individual tax brackets for 2019 are a bit wider than those for 2018.

Tax Rate

Single

Married, Filing Jointly

Head of Household

10%

$0 to $9,700

$0 to 19,400

$0 to $13,850

12%

$9,701-$39,475

$19,401-$78,950

$13,851-$52,850

22%

$39,476-$84,200

$78,951-$168,400

$52,851-$84,200

24%

$84,201-$160,725

$168,401-$321,450

$84,201-$160,700

32%

$160,726-$204,100

$321,451-$408,200

$160,701-$204,100

35%

$204,101-$510,300

$408,201-$612,350

$204,101-$510,300

37%

Over $510,300

Over $612,350

Over $510,300

Standard Deduction

The TCJA roughly doubled the standard deduction for 2018 to $12,000 for singles and $24,000 for marrieds filing jointly. The standard deduction will be even higher in 2019. As a result, over 90% of all taxpayers are expected to take the standard deduction instead of itemizing their personal deductions such as mortgage interest, property tax, medical expenses, and charitable contributions.

Below are the inflation-adjusted standard deduction amounts for 2019.

Single or Married Filing Separately

$12,200

Married Filing Jointly

$24,400

Head of Household

$18,350

Capital Gains Tax Rates

Long term capital gains are taxed at different rates than “ordinary” income you earn from working or running a business. Such gains come from the sale of capital assets like stocks or real estate owned for more than one year.

Capital Gains Tax Rate

Single

Married, Filing Jointly

Head of Household

0%

$0 to $39,375

$0 to $78,750

$0 to $52,750

15%

$39,376 to $434,550

$78,751 to 488,850

$52,751 to $461,700

20%

all over $434,550

al over $488,850

all over $461,700

Alternative Minimum Tax

The Alternative Minimum Tax (often called the AMT for short) is designed to ensure that higher income taxpayers pay at least some income taxes, even if they have many deductions. The AMT is in effect a separate tax regime for higher income taxpayers with its own tax rates. The AMT can be complicated, but basically you add back various deductions to your taxable income, subtract an AMT exemption amount, and then multiply the result by the AMT tax rates. The TCJA increased the amount of income exempt from the AMT, resulting in far fewer taxpayers being subject to it.

The exemption amounts for 2019 are shown below.

Filing Status

AMT Exemption Amount

Single

$71,700

Married, Filing Jointly

$111,700

Child Tax Credit

The TCJA increased the child care tax credit to $2,000 per child under age 17 and made it partly refundable: You can collect a credit of $1,400 per child even if you owe no tax. The refundable portion of the credit, officially called the Additional Child Tax Credit, is adjusted for inflation each year. However, it remains at $1,400 for 2019.

Pass-Through Deduction

The TCJA established a brand-new pass-through deduction starting in 2018 and scheduled to last through 2025. It allows owners of pass-through businesses such as sole proprietors, limited liability company owners, partners in partnerships, and S corporation shareholders to deduct up to 20% of their net business income from their income taxes. However, the deduction is unavailable for higher income pass-through business owners engaged in various types of service businesses. This is done by phasing out the deduction when a service business owner's income exceeds a threshold amount. For single service business owners, the deduction is reduced 2% by every $1,000 income exceeds the threshold amount. For married service business owners, it is reduced by 1% for every $1,000 income exceeds the threshold. At the top of the phase-out range, a service business owner receives no deduction at all.

The inflation-adjusted phase-out ranges for 2019 are shown below.

Filing Status

2019 Pass-Through Deduction Phase-Out Range for Specified Service Businesses

Single

$160,700 to $165,700

Married, Filing Jointly

$321,400 to $421,400

Annual Exclusion for Gifts

For 2019, the first $15,000 of gifts to any person are excluded from gift tax. The exclusion is increased to $155,000 for gifts to spouses.

Earned Income Tax Credit

The Earned Income Tax Credit is intended to help the working poor, especially those with children. The credit is refundable, meaning you’ll be paid the full amount even if you owe no income taxes. For 2019, you qualify for the EITC if your earned income is less than:

  • $15,570 ($21,370 married filing jointly) with no children



  • $41,094 ($46,884 married filing jointly) with one child



  • $46,703 ($52,493 married filing jointly) with two children, or



  • $50,162 ($55,952 married filing jointly) with three or more children.




The amount of the credit depends on your income and the number of children you have. For 2019, the minimum and maximum credits are:

  • $2 to $529 with no children

  • $9 to $3,526 with one child

  • $10 to $5,828 with two children, or

  • $11 to $6,557 with three or more children.


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