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