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Tax Cuts and Jobs Act

Thomson Reuters Checkpoint Projects Increase to Inflation-Adjusted Tax Brackets in 2019

Dana Greenstein  

Dana Greenstein  

A Thomson Reuters special report, Projected 2019 Inflation-Adjusted Tax Brackets and Other Key Figures, calculates the inflation adjustments to next year’s individual income tax brackets, standard deduction amounts, and other annually-adjusted figures. The adjustments are calculated under a new measure of inflation, as enacted by the Tax Cuts and Jobs Act (TCJA; P.L. 115-97, 12/22/2017). Many of these amounts were already increased by the TCJA, including the near doubling of the standard deduction amounts and significant increases to the alternative minimum tax (AMT) exemption amounts, and these larger base figures will be further increased for 2019 to reflect inflation over the past year.

The report provides detailed projections of the inflation-adjusted amounts for key individual items, expensing and various “small business” limitations, health, charitable, compliance and other specialty items, transfer tax and foreign items, and various civil penalties, equipping tax professionals, their clients, and compliance software developers with the information needed for tax planning and tax return preparation.

The projections are based on calculations derived from the most recent Consumer Price Index (CPI) data published by the Bureau of Labor Statistics, released on September 13, 2018. The new measure of inflation under the TCJA is “chained” CPI, which is distinguishable from the former measure because it takes into account a customer’s ability to substitute between goods in response to changes in relative prices.

“Many tax provisions are subject to income-based thresholds, such as whether a taxpayer is subject to the new limitation on excess business loss,” said Catherine Murray, Senior Editor/Author with the Tax Professionals business of Thomson Reuters. “These projections will help taxpayers plan for the 2019 tax year, which could potentially involve accelerating or deferring income before year-end.”

The TCJA—like most new legislation—contains a number of errors and ambiguities and has not yet been subject to a technical corrections bill. Where these issues arise in the context of inflation adjustments, our experts construed provisions in the way that seemed the most consistent with Congressional intent, reflecting the assumption that these ambiguities will eventually be resolved accordingly. While these projections reflect the best judgment of the experts at Thomson Reuters, it is worth noting that that there are instances where the statute could be interpreted in a contrary manner.

The free report is available for download at tax.thomsonreuters.com/checkpoint/2019taxrates.

Thomson Reuters Checkpoint tackles market disruption through integrated research, editorial insight, productivity tools, online learning, content marketing solutions and news updates along with intelligent links to related content and software. It is relied on by hundreds of thousands of tax and accounting professionals, and counts among its customers 97 of the Top 100 U.S. law firms, 99 of the Fortune 100 companies, and all of the top 100 U.S. CPA firms.

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