While this checklist outlines important tax changes for 2020, additional changes in tax law are more than likely to come up during the year ahead. 

Tax Brackets and Tax Rates

The big news is, of course, the tax brackets and tax rates for 2020. There are still seven (7) tax rates. They are: 10%, 12%, 22%, 24%, 32%, 35% and 37% (there is also a zero rate). Here's how those break out by filing status:

Tax rates for trusts and estates have changed, too:

You can compare all of these numbers to the 2019 tax tables here.

  • Remember to pay attention to the progressive nature of the rates when you're making comparisons - don't simply multiply your income by the top rate.

Standard Deduction Amounts. As part of the Tax Cuts and Jobs Act (TCJA) , the amount of the standard deduction doubled for most taxpayers in 2018. With inflation, those amounts remain the same for most taxpayers next year. Here are the projected standard deduction amounts for 2020:

  • For 2020, the additional standard deduction amount for the aged or the blind is $1,350. The additional standard deduction amount will increase to $1,650 if the individual is also unmarried and not a surviving spouse.
  • Also, for 2020, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer will not be more than: 
    1. $1,100, or
    2. the sum of $350 plus the individual’s earned income.

Section 199A deduction (also called the pass-through deduction) As part of the TCJA, sole proprietors and owners of pass-through businesses are eligible for a deduction of up to 20% to bring the tax rate lower for qualified business income. The deduction is subject to threshold and phased-in amounts. For 2020, those amounts will look like this:

The alternative minimum tax (AMT) exemption amounts are adjusted for inflation. Here’s what those numbers look like for 2019:

  • Kiddie Tax

For 2020, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,100 or the sum of $350 and the individual’s earned income (not to exceed the regular standard deduction amount). 

Under the TCJA, your child must pay taxes on their unearned income, but if that amount is more than $1,100, but less than $11,000, you may be able to elect to include that income on your return rather than file a separate return for your child.

  • Federal Estate Tax Exclusion

The federal estate tax exclusion for decedents dying will increase to $11.58 million per person or $23.16 million per married couple. 

  • Gift Tax Exclusion

The annual exclusion for federal gift tax purposes will remain at $15,000 in 2020. That means that you can gift $15,000 per person to as many people as you want with no federal gift tax consequences in 2019; if you split gifts with your spouse, that total is $30,000 per person.

                                     CERTIFIED PUBLIC ACCOUNTANT


Nicholas G. Vardalos & Company is a full service accounting firm serving clients throughout the Chicago metropolitan area, northwest Indiana and southwest Michigan.

2020 Tax RATES