2019 Tax Brackets, Standard Deduction, and Other Changes

I had been waiting to do this article, because I didn’t want to have to rewrite it if Republicans decided to pass another significant piece of tax legislation while they still have control of both chambers of Congress. But it’s now pretty clear that that won’t be happening.

While 2018 was a major overhaul relative to 2017, the differences between 2019 and 2018 will be pretty modest. The overwhelming majority of the changes are simply inflation adjustments from 2018’s figures. One point of interest is that this is the first year for which the inflation adjustments are based on chained CPI-U rather than regular CPI-U.

If you have questions about a particular amount that I do not mention here, you can likely find it in the official IRS announcements: Rev. Proc. 2018-57 (which contains most inflation adjustment figures) and Notice 2018-83 (for figures relating to retirement accounts).

Single 2019 Tax Brackets

Married Filing Jointly 2019 Tax Brackets

Head of Household 2019 Tax Brackets

Married Filing Separately 2019 Tax Brackets

Standard Deduction Amounts

The 2019 standard deduction amounts are as follows:

• Single or married filing separately: $12,200
• Married filing jointly: $24,400
• Head of household: $18,350

The additional standard deduction for people who have reached age 65 (or who are blind) is $1,300 for each married taxpayer or $1,650 for unmarried taxpayers.

IRA Contribution Limits

The contribution limit for Roth IRA and traditional IRA accounts has increased to $6,000.

The catch-up contribution limit for people age 50 or over does not get inflation adjustments and therefore is still $1,000.

401(k), 403(b), 457(b) Contribution Limits

The salary deferral limit for 401(k) and other similar plans has increased to $19,000.

The catch-up contribution limit for 401(k) and other similar plans is unchanged, at $6,000.

The maximum possible contribution for defined contribution plans (e.g., for a self-employed person with a sufficiently high income contributing to a solo 401(k)) is increased to $56,000.

Child Tax Credit

The child tax credit ($2,000 per child) and the related phaseout threshold ($200,000 of modified adjusted gross income, $400,000 if married filing jointly) do not get inflation adjustments. The portion of the credit that can be refundable (up to $1,400 per child) does receive inflation adjustments, but it is still $1,400 for 2019.

Capital Gains and Qualified Dividends

For 2019, long-term capital gains and qualified dividends face the following tax rates:

• 0% tax rate if they fall below $78,750 of taxable income if married filing jointly, $52,750 if head of household, or $39,375 if filing as single or married filing separately.
• 15% tax rate if they fall above the 0% threshold but below $488,850 if married filing jointly, $461,700 if head of household, $434,550 if single, or $244,425 if married filing separately.
• 20% tax rate if they fall above the 15% threshold.

Alternative Minimum Tax (AMT)

The AMT exemption amount is increased to:

• $71,700 for single people and people filing as head of household,
• $111,700 for married people filing jointly, and
• $55,850 for married people filing separately.

Estate Tax

The estate tax exclusion is increased to $11.4 million per decedent.

Individual Mandate

Beginning in 2019, the individual mandate (i.e., the penalty for not having health insurance) has disappeared.

Alimony Payments

For divorces that become finalized in 2019 or later, alimony payments are no longer deductible to the payor, nor includable as income to the payee.

Pass-Through Business Income

With respect to the 20% deduction for qualified pass-through income, for 2019, the threshold amount at which the “specified service trade or business” phaseout and the wage (or wage+property) limitations begin to kick in will be $321,400 for married taxpayers filing jointly, $160,725 for married taxpayers filing separately, and $160,700 for single taxpayers or people filing as head of household.