The IRS recently issued its inflation adjustments for the 2019 tax year, affecting more than 60 provisions in the tax code. Here are some of the major highlights to be aware:
• Income Tax Rates: For 2019, there are seven tax rates, beginning at 37% for individual single taxpayers with incomes greater than $510,300 ($612,350 for married couples filing jointly). In descending order, the others are 35%, for incomes over $204,100 ($408,200 for couples); 32% for incomes over $160,725 ($321,450 for couples); 24% for incomes over $84,200 ($168,400 for couples); 22% for incomes over $39,475 ($78,950 for couples); 12% for incomes over $9,700 ($19,400 for couples); and last (and least), 10% for single individuals with incomes of $9,700 or less ($19,400 for couples).
• Standard Deduction: For married taxpayers filing jointly, this has increased to $24,400 for 2019, up $400 from the prior year. For single taxpayers and married individuals filing separately, it rises to $12,200 for 2019, up $200, and for heads of households, it will be $18,350 for tax year 2019, up $350.
• Estate Tax Exclusion: Estates of decedents who die during 2019 have a basic exclusion amount of $11,400,000, an increase from a total of $11,180,000 for estates of decedents who died in 2018.
• No More Individual Mandate Penalty: For the calendar year 2019, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is zero, per the tax overhaul enacted in 2017 (in 2018, the amount was $695).
• Earned Income Credit: For tax year 2019, the maximum earned income credit amount is $6,557 for taxpayers filing jointly who have three or more qualifying children; that’s up from a total of $6,431 for tax year 2018.
• Alternative Minimum Tax (“AMT”): For tax year 2019, the AMT exemption amount has increased to $71,700; it begins to phase out at $510,300 ($111,700, for married couples filing jointly for whom the exemption begins to phase out at $1,020,600).