IRS Announces Tax Bracket Changes for 2020

In 2017, Congress changed federal income tax rates and brackets with the Tax Cuts and Jobs Act of 2017. The changes included a lowering of the personal and corporate tax rates, along with a doubling of the standard personal deduction.

For the 2020 tax year, the IRS has made some changed that could affect your take home pay and total federal tax liability. MSN reports that the changes do not affect the rates themselves, but changes the income thresholds for the brackets as adjusted for inflation.

For example, tax year 2019 has a married couple filing jointly in the 12% federal tax bracket if that couple’s income ranges between $19,401 to $78,950. The standard deduction for this couple is $24,400.

The 2020 brackets will be inflation-adjusted as follows.

Married individuals, filing jointly:

  • 10%: Up to $19,750
  • 12%: Between $19,750 to $80,250
  • 22%: Between $80,250 to $171,050
  • 24%: Between $171,050 to $326,600
  • 32%: Between $326,600 to $414,700
  • 35%: Between $414,700 to $622,050
  • 37%: Over $622,050

Unmarried individuals:

  • 10%: Up to $9,875
  • 12%: Between $9,875 to $40,125
  • 22%: Between $40,125 to $85,525
  • 24%: Between $85,525 to $163,300
  • 32%: Between $163,300 to $207,350
  • 35%: Between $207,350 to $518,400
  • 37%: Over $518,400

Heads of household:

  • 10%: Up to $14,100
  • 12%: Between $14,100 to $53,700
  • 22%: Between $53,700 to $85,500
  • 24%: Between $85,500 to $163,300
  • 32%: Between $163,300 to $207,350
  • 35%: Between $207,350 to $518,400
  • 37%: Over $518,400

Married individuals, filing separately:

  • 10%: Up to $9,875
  • 12%: Between $9,875 to $40,125
  • 22%: Between $40,125 to $85,525
  • 24%: Between $85,525 to $163,300
  • 32%: Between $163,300 to $207,350
  • 35%: Between $207,350 to $311,025
  • 37%: Over $311,025

Keep in mind that this does not account for state and any local income taxes that you may be subject to. Virginia’s tax rates range between 2% and a top marginal rate of 5.75% starting at income over $17,000 per year.

North Carolina has a flat income tax rate of 5.75%. Maryland’s personal income tax brackets range between 2% on earnings $1,000 or below, up to 5.75% on earnings over $250,000.

If you are insure about your tax situation, now is the time to consult with a trusted CPA to protect yourself against surprise outstanding balances. I have an excellent network of professionals who can serve you in this capacity.

If you need help, let me know and I will connect you with a competent and trusted professional to take care of your needs!

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