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Individual Tax

Key 2019 individual tax items as calculated by Thomson Reuters Checkpoint based on inflation data

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

The income tax brackets, standard deduction amounts, and many other tax items are adjusted annually for cost-of-living increases. These adjustments reflect, under a measure of inflation provided by the Tax Cuts and Jobs Act (TCJA; P.L. 115-97, 12/22/2017), the average chained Consumer Price Index (CPI) for all-urban customers (C-CPI-U) for the 12-month period ending the previous Aug. 31. The August 2018 CPI summary has been released by the Labor Department. Using the chained CPI for August 2018 (and the preceding 11 months), Thomson Reuters Checkpoint has calculated the 2019 indexed amounts.

CheckmarkCaution: The TCJA (like most new legislation) contains a number of errors and ambiguities and has not yet been the subject of a comprehensive technical corrections bill. Where these issues arose in the context of inflation adjustments, we construed provisions in the way that seemed the most consistent with Congressional intent, reflecting our assumption that these ambiguities will eventually be resolved accordingly. While these projections reflect our best judgment, it is nonetheless worth noting that that there are instances where the statute could be interpreted in a different manner.

For the projected 2019 adjustments for expensing and accounting method limitations, see here; for health, charitable, compliance and other specialty items, see here; for transfer tax and foreign items, see here; for civil penalties, see here; and for income tax brackets, the standard deduction amounts, and a number of other individual items, see below.

Tax rate schedules.  The tax rate schedules for 2019 will be as follows.

For married individuals filing joint returns and surviving spouses:
If taxable income is: The tax 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 $611,600 $93,257 plus 35% of the excess over $408,200
Over $612,350 $164,709.50 plus 37% of the excess over $612,350
For single individuals (other than heads of households and surviving spouses):
If taxable income is: The tax 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 $14,382.50 plus 24% of the excess over $84,200
Over $160,725 but not over $204,100 $32,748.50 plus 32% of the excess over $160,725
Over $204,100 but not over $510,300 $46,628.50 plus 35% of the excess over $204,100
Over $510,300 $153,798.50 plus 37% of the excess over $510,300
For heads of household:
If taxable income is: The tax 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
For marrieds filing separate returns:
If taxable income is: The tax 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 $14,382.50 plus 24% of the excess over $84,200
Over $160,725 but not over $204,100 $32,748.50 plus 32% of the excess over $160,725
Over $204,100 but not over $306,175 $46,628.50 plus 35% of the excess over $204,100
Over $306,175 $82,354.75 plus 37% of the excess over $306,175
For estates and trusts:
If taxable income is: The tax is:
Less than $2,600 10% of taxable income
Over $2,600 but not over $9,300 $260 plus 24% of the excess over $2,600
Over $9,300 but not over $12,750 $1,868 plus 35% of the excess over $9,300
Over $12,750 $3,075.50 plus 37% of the excess over $12,750

Standard deductions.  The basis standard deduction for 2019 will be:

Joint return or surviving spouse $24,400 (up from $24,000 for 2018)
Single (other than head of household or surviving spouse) $12,200 (up from $12,000 for 2018)
Head of household $18,350 (up from $18,000 for 2018)
Married filing separate returns $12,200 (up from $12,000 for 2018)

Dependents. For an individual who can be claimed as a dependent on another’s return, the basic standard deduction for 2019 will be $1,100 (up from $1,050 for 2018), or $350 (same as for 2018) plus the individual’s earned income, whichever is greater. However, the standard deduction may not exceed the regular standard deduction for that individual.

Older and blind taxpayers. For 2019, the additional standard deduction for married taxpayers 65 or over or blind will be $1,300 (same as for 2018). For a single taxpayer or head of household who is 65 or over or blind, the additional standard deduction for 2019 will be $1,650 (up from $1,600 for 2018).

Capital gains.  For 2019, the capital gains tax rates will be as follows:

The 0% capital gains rate applies to adjusted net capital gain of up to:

  • . . . Joint returns and surviving spouses—$78,750 (up from $77,200 for 2018)
  • . . . Married taxpayers filing separately—$39,350 (up from $38,600 for 2018)
  • . . . Heads of household—$52,750 (up from $51,700 for 2018)
  • . . . Single filers—$39,350 (up from $38,600 for 2018)
  • . . . Estates and trusts—$2,650 (up from $2,600 for 2018)

The 15% capital gains tax rate applies to adjusted net capital gain over the amount subject to the 0% rate, and up to:

  • . . . Joint returns and surviving spouses—$488,850 (up from $479,000 for 2018)
  • . . . Married taxpayers filing separately—$244,400 (up from $239,500 for 2018)
  • . . . Heads of household—$461,700 (up from $452,400 for 2018)
  • . . . Single filers—$434,550 (up from $425,800 for 2018)
  • . . . Estates and trusts—$12,950 (up from $12,700 for 2018)

The 20% capital gains tax rate applies to adjusted net capital gain over the above 15%-maximum amounts.

Kiddie tax. The exemption from the kiddie tax for 2019 will be $2,200 (up from $2,100 for 2018). A parent will be able to elect to include a child’s income on the parent’s return for 2019 if the child’s income is more than $1,100 and less than $11,000 (up from $1,050 and $10,500 for 2018).

AMT exemption for child subject to kiddie tax. The AMT exemption for 2019 for a child subject to the kiddie tax will be the lesser of (1) $7,750 (up from $7,600 for 2018) plus the child’s earned income, or (2) $71,700 (up from $70,300 for 2018).

AMT figures. For 2019, the AMT exemption amounts will be:

  • . . . Joint returns or surviving spouses—$111,700 (up from $109,400 for 2018)
  • . . . Unmarried individuals (other than surviving spouses)—$71,700 (up from $70,300 for 2018)
  • . . . Married individuals filing separate returns—$55,850 (up from $54,700 for 2018)
  • . . . Estates and trusts—$25,000 (up from $24,600 for 2018)

For 2019, the excess taxable income above which the 28% tax rate applies will be $97,400 for married persons filing separately (up from $95,550 for 2018), and $194,800 for joint returns, unmarried individuals and estates and trusts (up from $191,100 for 2018).

For 2019, the amounts used under Code Sec. 55(d)(3) to determine the phaseout of the AMT exemption amounts will be:

  • . . . Joint returns or surviving spouses—$1,020,600 (up from $1 million for 2018)
  • . . . Unmarried individuals (other than surviving spouses)—$510,300 (up from $500,000 for 2018)
  • . . . Married filing separate returns—$510,300 (up from $500,000 for 2018)
  • . . . Estates and trusts—$83,500 (up from $81,900 for 2018)

Income-based limitations on Sec. 199A/qualified business income deduction.  For 2019, taxpayers with taxable income above $160,700 ($321,450 for joint filers) are subject to certain limitations on the Code Sec. 199A deduction. The 2018 amounts are $157,500 and $315,000.

Excess business loss disallowance rule.  Under Code Sec. 461(l), an excess business loss for the tax year 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 (up from $500,000 for 2018) and $255,000 for other individuals (up from $250,000 for 2018).

Educator expenses. For 2019, eligible elementary and secondary school teachers can claim an above-the line deduction for up to $250 per year of expenses paid for books and certain other supplies used in the classroom (same as for 2018).

Interest exclusion for higher education. For 2019, the phase-out for excluding interest on U.S. savings bonds redeemed to pay qualified higher education expenses will begin at modified adjusted gross income (MAGI) above $81,100 ($121,600 on a joint return). For 2018, the corresponding figures are $79,550 and $119,300.

Qualified transportation fringe benefits. For 2019, an employee will be able to exclude up to $260 (same as for 2018) a month for qualified parking expenses, and up to $260 a month (same as for 2018) of the combined value of transit passes and transportation in a commuter highway vehicle.

Refundable child credit. For 2019, the child credit will be refundable, subject to the limit described below, to the extent of the greater of:

  • . . . 15% of earned income above $2,500 (same as for 2018), or
  • . . . for taxpayers with three or more qualifying children, the excess of the taxpayer’s social security taxes for the tax year over his or her earned income tax credit for the year. (Code Sec. 24(d))

The refundable portion of the child tax credit for any qualifying child can’t exceed $1,400 (same as for 2018).

Earned income tax credit. For 2019, the maximum amount of earned income on which the earned income tax credit will be computed is $6,920 for taxpayers with no qualifying children, $10,370 for taxpayers with one qualifying child, and $14,570 for taxpayers with two or more qualifying children. These amounts are up from $6,780, $10,180, and $14,290 for 2018.

For 2019, the phaseout of the allowable earned income tax credit will begin at $14,450 for joint filers with no qualifying children ($8,650 for others with no qualifying children), and at $24,820 for joint filers with one or more qualifying children ($19,030 for others with one or more qualifying children). These amounts are up from $14,170, $8,490, $24,350 and $18,340 for 2018.

Checkmark Observation:  Taxpayers must use IRS tables to determine the amount of their earned income tax credit. While these tables are based on the inflation-adjusted figures set out above, because the credit under the tables is the same for everyone within a $50 range, there may be slight differences between the credit under the tables and the credit the taxpayer would determine using those inflation-adjusted figures.

The amount of disqualified income (generally investment income) a taxpayer may have before losing the entire earned income tax credit will be $3,600 for 2019 (up from $3,500 for 2018).

Lifetime learning credit phaseout. For 2019, a taxpayer’s MAGI in excess of $58,000 (up from $57,000 for 2018), $116,000 for a joint return (up from $114,000 in 2018) will be used to determine the reduction under Code Sec. 25A(d)(2) in the amount of the Lifetime Learning Credit otherwise allowable under Code Sec. 25A(a)(2).

Adoption credit. For 2019, the credit allowed for an adoption of a child with special needs will be $14,080 (up from $13,810 for 2018). The maximum credit allowed for other adoptions will be the amount of qualified adoption expenses up to $14,080 (up from $13,810 for 2018).

For 2019, the credit will begin to phase out for taxpayers with MAGI in excess of $211,170 (up from $207,140 for 2018). The phaseout will be complete if MAGI is $251,170 (up from $247,140 for 2018).

Adoption exclusion. For 2019, the amount that can be excluded from an employee’s gross income for the adoption of a child with special needs will be $14,080 (up from $13,810 for 2018). For 2019, the maximum amount that can be excluded from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee will be $14,080 (up from $13,810 for 2018).

For 2019, the amount excludable from an employee’s gross income will begin to phase out for taxpayers with MAGI in excess of $211,170 (up from $207,140 for 2018). The phaseout will be complete if MAGI is $251,170 (up from $247,140 for 2018).

Student loan interest deduction. For 2019, the deduction phases out ratably for taxpayers other than joint filers with MAGI between $70,000 and $85,000 (up from $65,000 and $80,000 for 2018), and MAGI between $140,000 and $170,000 for joint filers (up from $135,000 and $165,000 for 2018).

MAGI limits for making deductible contributions by active plan participants to traditional IRAs. In general, an individual who isn’t an active participant in certain employer-sponsored retirement plans, and whose spouse isn’t an active participant, may make an annual deductible cash contribution to an IRA up to the lesser of: (1) an inflation-adjusted statutory dollar limit, or (2) 100% of the compensation that’s includible in his or her gross income for that year. For 2019, the statutory dollar limit is $6,000 (up from $5,500 for 2018), plus an additional $1,000 for those age 50 or older. If the individual (or his or her spouse) is an active plan participant, the deduction phases out over a specified dollar range of MAGI.

For taxpayers filing joint returns, the otherwise allowable deductible contribution will be phased out ratably for 2019 for MAGI between $103,000 and $123,000 (up from $101,000 and $121,000 for 2018).

For 2019, for single taxpayers and heads of household, the otherwise allowable deductible contribution will be phased out ratably for MAGI between $64,000 and $74,000 (up from $63,000 and $73,000 for 2018). For married taxpayers filing separate returns, the otherwise allowable deductible contribution will be phased out ratably for MAGI between $0 and $10,000 (same as for 2018).

For a married taxpayer who is not an active plan participant but whose spouse is such a participant, the otherwise allowable deductible contribution will be phased out ratably for 2019 for MAGI between $193,000 and $203,000 (up from between $189,000 and $199,000 for 2018).

MAGI limits for making contributions to Roth IRAs. Individuals may make nondeductible contributions to a Roth IRA, subject to the overall limit on IRA contributions. The maximum annual contribution that can be made to a Roth IRA is phased out for taxpayers with MAGI over certain levels for the tax year. For taxpayers filing joint returns, the otherwise allowable contributions to a Roth IRA will be phased out ratably for 2019 for MAGI between $193,000 and $203,000 (up from $189,000 and $199,000 for 2018). For single taxpayers and heads of household, it will be phased out ratably for MAGI between $122,000 and $137,000 (up from $120,000 and $135,000 for 2018). For married taxpayers filing separate returns, the otherwise allowable contribution will continue to be phased out ratably for MAGI between $0 and $10,000 (same as for 2018).

Saver’s credit. For tax years beginning in 2019, an eligible lower-income taxpayer can claim a nonrefundable tax credit for the applicable percentage (50%, 20%, or 10%, depending on filing status and AGI) of up to $2,000 of his or her qualified retirement savings contributions, as follows:

  • . . . Joint filers: $0 to $39,000, 50%; $39,000 to $42,500, 20%; and $42,500 to $65,000, 10% (no credit if AGI is above $65,000).
  • . . . Heads of households: $0 to $29,250, 50%; $29,250 to $31,875, 20%; and $31,875 to $48,750, 10% (no credit if AGI is above $48,750).
  • . . . All other filers: $0 to $19,500, 50%; $19,500 to $21,250, 20%; and $21,250 to $32,500, 10% (no credit if AGI is above $32,500).

By way of comparison, for tax years beginning in 2018, an eligible lower-income taxpayer can claim a nonrefundable tax credit for the applicable percentage (50%, 20%, or 10%, depending on filing status and AGI) of up to $2,000 of his or her qualified retirement savings contributions, as follows:

  • . . . Joint filers: $0 to $38,000, 50%; $38,000 to $41,000, 20%; and $41,000 to $63,000, 10% (no credit if AGI is above $63,000).
  • . . . Heads of households: $0 to $28,500, 50%; $28,500 to $30,750, 20%; and $30,750 to $47,250, 10% (no credit if AGI is above $47,250).
  • . . . All other filers: $0 to $19,000, 50%; $19,000 to $20,500, 20%; and $20,500 to $31,500, 10% (no credit if AGI is above $31,500).
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