2020 Adjustments to Standard Deductions and Tax Brackets – Did You Know?
The IRS has updated the 2020 inflationary adjustments for both standard deductions and the income limits for marginal tax rates. For individual taxpayers, the standard deduction for 2020 will be $12,400, up $200 from the 2019 amount. The deduction for joint filers will increase by $400 to $24,800, while the head-of-household deduction will be $18,650, an increase of $300 from 2019. As a reminder, there are no personal exemptions for tax year 2020, since the Tax Cuts and Jobs Act (TCJA) eliminated them through tax year 2025.
The maximum income for every tax rate bracket is also increasing in 2020. For example, in 2019, the jump from the 24% to the 32% tax rate occurred for individual incomes over $160,725 ($321,450 for married filing jointly). For 2020, the 32% rate will apply to incomes above $163,300 for individuals, or $326,600 for joint filers.