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IRS Adjusts Tax Rates for Individuals for 2020
January 05, 2021The IRS has adjusted tax rates, standard deduction amounts, AMT limitations and more. Check out what’s changed for tax year 2020.
Taxpayers will want to read up on the IRS’ annual inflation adjustments for tax year 2020. Though released last year, these rates apply to this coming filing season. More than 60 tax provisions have changed, here are some of those changes.
Interested in learning more about maximizing tax savings before year end? Check out our Year End Tax Planning Guide for Individuals.
Tax rates
Tax Rate |
Single |
Head of Household |
Married Filing Jointly/ Surviving Spouse |
Married Filing Separately |
10% |
$0 to $9,875 |
$0 to $14,100 |
$0 to $19,750 |
$0 to $9,875 |
12% |
$9,876 to $40,125 |
$14,101 to $53,700 |
$19,751 to $80,250 |
$9,876 to $40,125 |
22% |
$40,126 to $85,525 |
$53,701 to $85,500 |
$80,251 to $171,050 |
$40,126 to $85,525 |
24% |
$85,526 to $163,300 |
$85,501 to $163,300 |
$171,751 to $326,600 |
$85,526 to $163,300 |
32% |
$163,301 to $207,350 |
$163,301 to $207,350 |
$326,601 to $414,700 |
$163,301 to $207,350 |
35% |
$207,351 to $518,400 |
$207,351 to $518,400 |
$414,701 to $622,050 |
$207,351 to $311,025 |
37% |
Over $518,400 |
Over $518,400 |
Over $622,050 |
Over $311,025 |
Standard deduction
Single and married filing separately taxpayers- $12,400
Married filing jointly- $24,800
Heads of household- $18,650
Personal exemption
Remains 0 (elimination of personal exemption was a TCJA provision)
Itemized deduction
No limitation on itemized deduction (eliminated by TCJA)
AMT Exemption Amounts
Individuals- $72,900
Married filing jointly & surviving spouses- $113,400
Married filing separately- $56,700
Trusts & estates- $25,400
Earned income tax credit
Maximum credit allowed is $538 if taxpayer has no qualifying children, $3,584 if there is one qualifying child, $5,920 for two qualifying children and $6,660 for three.
Qualified transportation fringe benefit
$270 (monthly limitation each for qualified parking, commuter highway vehicle and any transit pass)
Contributions to health flexible spending arrangements
Beginning in 2020, the dollar limitation for employee salary reductions for contributions to health FSAs is $2,750.
Medical savings account
Participants with self-only coverage in a medical savings account are allowed an annual deductible no less than $2,350 and no more than $3,550.
For self only coverage, the max out of pocket expense is $4,750.
Participants with family coverage- the floor for the annual deductible is $4,750 and no more than $7,100.
For family coverage, the out of picket expense limit is $8,650.
Lifetime learning credit
The adjusted gross income amount used by joint filers to assess the reduction in the lifetime learning credit is $118,000.
Foreign earned income exclusion
$107,600
Estates of decedents
For estates of decedents who pass away during 2020, they have a basic exclusion amount of $11,580,000.
Annual exclusion for gifts
$15,000
Adoptions
The maximum credit for adoptions in 2020 is $14,300.
Don’t forget to check out our 2020 Year End Tax Planning Guide for Individuals.
Questions? Contact us.
