Tax Season 2020: Breakdown of new tax brackets, other changes to know

4 ways to keep more of your money at tax time
4 ways to keep more of your money at tax time

Most Americans are getting ready to get their taxes together -- and there are some changes to note.

The IRS has made inflation adjustments to a range of key figures, from the amount you can put in a 401(k) retirement plan to the individual income tax brackets that help you determine your tax rate.

Here are your new tax brackets in 2020:

2020 Tax Brackets.
2020 Tax Brackets. (IRS)

The IRS has also increased standard deduction for the 2020 tax year, which could reduce your taxable income.

The current standard deduction is $12,400 for singles, up from $12,200 in the prior year, and $24,800 for married joint filers, up from $24,400 in 2019.

Retirement savings

The IRS has increased the employee contribution limit for 401(k), 403(b) and most 457 plans to $19,500, up from $19,000 in 2019.

If you’re age 50 or older, you can contribute in an additional $6,500. That’s up from $6,000 in 2019.

IRS retirement savings contribution limits.
IRS retirement savings contribution limits. (IRS)

Gift and estate taxes

The Tax Cuts and Jobs Act nearly doubled the amount that decedents can bequeath in death — or gift over their lifetime — and shield it from federal estate and gift taxes, which are 40 percent.

For 2020, the lifetime gift and estate tax exemption has increased again. The lifetime exemption is $11.58 million per individual, up from $11.4 million in 2019.

About the Author: