IRS Announces Tax Inflation Adjustments for Tax Year 2020
The IRS recently announced the tax year 2020 annual inflation adjustments for more than 60 tax provisions. Revenue Procedure 2019-44 provides details on the adjustments.
The tax law change covered in the procedure was added by the Taxpayer First Act of 2019, which increased the failure to file penalty to $330 for returns due after the end of 2019. The new penalty will be adjusted for inflation beginning with tax year 2021.
The standard deduction for married filing jointly rises to $24,800 for tax year 2020, up $400 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,400, up $200. For heads of households, the standard deduction will be $18,650, up $300 from the previous year.
The personal exemption for tax year 2020 remains at 0, as it was for 2019. This elimination was a provision in the Tax Cuts and Jobs Act.
For tax year 2020, the tax rates are:
- 37% for incomes of single individuals greater than $518,400 ($622,050 for married couples filing jointly)
- 35% for incomes over $207,350 ($414,700 for married couples filing jointly)
- 32% for incomes over $163,300 ($326,600 for married couples filing jointly)
- 24% for incomes over $85,525 ($171,050 for married couples filing jointly)
- 22% for incomes over $40,125 ($80,250 for married couples filing jointly)
- 12% for incomes over $9,875 ($19,750 for married couples filing jointly)
- 10% for incomes of $9,875 or less ($19,750 for married couples filing jointly)
As in 2019 and 2018, for tax year 2020 there is no limitation on itemized deductions.
For details on these and other inflation adjustments, including the Alternative Minimum Tax exemption, Earned Income Credit and the qualified transportation fringe benefit, visit IRS.gov.