The IRS made inflation adjustments for various 2020 tax items and they will apply to a wide range of taxpayers.
The standard deduction for married filing jointly rises to $24,800 for tax year 2020, up $400 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,400 for 2020, up $200, and for heads of households, the standard deduction will be $18,650 for tax year 2020, up $300.
The personal exemption for tax year 2020 remains at $0, as it was for 2019. This elimination of the personal exemption was a provision of the Tax Cuts and Jobs Act.
Marginal rates: For tax year 2020, the top tax rate remains 37% for individual single taxpayers with incomes higher than $518,400 ($622,050 for married couples filing jointly).
The other rates are:
35% for incomes over $207,350 ($414,700 for married couples filing jointly).
32% for incomes over $163,300 ($326,600 for married couples filing jointly).
24% for incomes over $85,525 ($171,050 for married couples filing jointly).
22% for incomes over $40,125 ($80,250 for married couples filing jointly).
12% for incomes over $9,875 ($19,750 for married couples filing jointly).
The lowest rate is 10% for single individuals with incomes of $9,875 or less ($19,750 for married couples filing jointly).
For 2020, as in 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
The alternative minimum tax exemption amount for tax year 2020 is $72,900, and it begins to phase out at $518,400 ($113,400 for married couples filing jointly, for whom the exemption begins to phase out at $1,036,800). The 2019 exemption amount was $71,700, and began to phase out at $510,300 ($111,700, for married couples filing jointly, for whom the exemption began to phase out at $1,020,600).
The threshold for excess business losses for tax year 2020 is $259,000 ($518,000 for married couples filing jointly).
The dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,750, up $50 from the limit for 2019.
The dollar limitation for HSA contributions is $3,550 for individual coverage, up $50 from 2019 ($7,100 for family coverage, up $100 from 2019). The catch-up contribution limit for those over age 55 will remain at $1,000.
The foreign earned income exclusion for tax year 2020 is $107,600, up $1,700 from 2019.
The annual exclusion for gifts is $15,000 for calendar year 2020, as it was for calendar year 2019.
The unified credit against estate tax for an estate of any decedent dying in calendar year 2020 is $11,580,000, up $180,000 from 2019.