IRS Releases Official Inflation-Adjusted Tax Figures for 2019

On November 15, 2018, the IRS issued Revenue Procedure 2018-57, which details the official inflation-adjusted tax rate schedules and other tax figures for the 2019 tax year. The highlights are as follows:

Tax Rate Schedules: The tax rates remain the same as 2018, though the taxable income thresholds increased slightly.

Married Filing Jointly

If taxable income is:                                                                        The tax amount is:

Not over $19,400                                                                              10% of taxable income

Over $19,400 but not over $78,950                                           $1,940 plus 12% of the excess over $19,400

Over $78,950 but not over $168,400                                        $9,086 plus 22% of the excess over $78,950

Over $168,400 but not over $321,450                                      $28,765 plus 24% of the excess over $168,400

Over $321,450 but not over $408,200                                      $65,497 plus 32% of the excess over $321,450

Over $408,200 but not over $612,350                                      $93,257 plus 35% of the excess over $408,200

Over $612,350                                                                                    $164,710 plus 37% of the excess over $612,350

Single

If taxable income is:                                                                        The tax amount is:

Not over $9,700                                                                                10% of taxable income

Over $9,700 but not over $39,475                                             $970 plus 12% of the excess over $9,700

Over $39,475 but not over $84,200                                           $4,543 plus 22% of the excess over $39,475

Over $84,200 but not over $160,725                                        $14,383 plus 24% of the excess over $84,200

Over $160,725 but not over $204,100                                      $32,749 plus 32% of the excess over $160,725

Over $204,100 but not over $510,300                                      $46,629 plus 35% of the excess over $204,100

Over $510,300                                                                                    $153,799 plus 37% of the excess over $510,300

Head of Household

If taxable income is:                                                                        The tax amount is:

Not over $13,850                                                                              10% of taxable income

Over $13,850 but not over $52,850                                           $1,385 plus 12% of the excess over $13,850

Over $52,850 but not over $84,200                                           $6,065 plus 22% of the excess over $52,850

Over $84,200 but not over $160,700                                        $12,962 plus 24% of the excess over $84,200

Over $160,700 but not over $204,100                                      $31,322 plus 32% of the excess over $160,700

Over $204,100 but not over $510,300                                      $45,210 plus 35% of the excess over $204,100

Over $510,300                                                                                    $152,380 plus 37% of the excess over $510,300

Married Filing Separate

If taxable income is:                                                                        The tax amount is:

Not over $9,700                                                                                10% of taxable income

Over $9,700 but not over $39,475                                             $970 plus 12% of the excess over $9,700

Over $39,475 but not over $84,200                                           $4,543 plus 22% of the excess over $39,475

Over $84,200 but not over $160,725                                        $14,383 plus 24% of the excess over $84,200

Over $160,725 but not over $204,100                                      $32,749 plus 32% of the excess over $160,725

Over $204,100 but not over $306,175                                      $46,629 plus 35% of the excess over $204,100

Over $306,175                                                                                    $82,355 plus 37% of the excess over $306,175

Standard Deductions: The 2019 standard deductions also increased slightly to $24,400 (married filing jointly), $12,200 (single), $18,350 (head of household) and $12,200 (married filing separate).  For an individual who can be claimed as a dependent on another’s return, the standard deduction will be $1,100, or $350 plus the individual’s earned income, whichever is greater.  The additional deduction for married taxpayers 65 or over or blind remained the same at $1,300.  For a single or head of household taxpayer who is 65 or over or blind, the deduction increased to $1,650.

Capital Gains: The 0% capital gains rate will now apply to adjusted net capital gain up to $78,750 (married filing jointly), $39,375 (single), $52,750 (head of household) and $39,375 (married filing separate). The 15% capital gains rate will apply to adjusted net capital gain over the 0% maximum threshold and up to $488,850 (married filing jointly), $434,550 (single), $461,700 (head of household) and $244,425 (married filing separate). The 20% capital gains rate will apply to adjusted capital gain over the 15% maximum threshholds.

Kiddie Tax: The exemption from kiddie tax for 2019 will be $2,200. A parent will be able to elect to include a child’s income on their return if the child’s income is more than $1,100 and less than $11,000.

Alternative Minimum Tax: For 2019, the AMT exemption amounts will be $111,700 (married filing jointly), $71,700 (single and head of household) and $55,850 (married filing separate). The excess taxable income above which the 28% AMT tax rate applies will be $194,800 for joint returns and $97,400 for unmarried individuals and married persons filing separately.  The exemption phaseout amounts will be $1,020,600 for joint returns and $510,300 for unmarried individuals and married persons filing separately.

Qualified Business Income Deduction Limitations:  For 2019, taxpayers with taxable income above $321,400 for joint filers, $160,700 for single and heald of household filers, and $160,725 for married filing separate filers are subject to limitations on their QBI (Section 199A) deduction.

Excess Business Loss Disallowance Rules: An excess business loss is the excess of aggregate deductions of the taxpayer attributable to the taxpayer's trades and businesses, over the sum of aggregate gross income or gain of the taxpayer plus a threshold amount. For 2019, the threshold amount is $510,000 for married individuals filing jointly and $255,000 for all other individuals.

For information on other 2019 tax changes, see IRS Rev. Proc. 2018-57.

For questions on how these changes may affect you, please consult your tax advisor.