An Overview of the Tax Changes for 2020
After a couple of years of more substantial tax changes, things have settled down quite a bit and there are really only a few “Updates” as we head into 2020. This is an overview of the updates that will apply to the 2020 tax year (return to be filed in April of 2021).
- The IRS has upwardly adjusted each tax bracket based on inflation. This means more of your income will be taxed at a lower rate.
- The standard deduction has also increased; going up $200 for individual filers and $400 for married joint filers. Head of household filers will get a $300 increase.
- The employee contribution limit for 401(k) and 403(b) plans has increased $500 to $19,500. Those 50 and older can contribute an additional $6,500 under the catch-up provisions.
- The IRA contribution limit has not increased and will stay at the annual maximum of $6,000, plus another $1,000 for savers 50 and over.
- The federal gift and estate tax exemption is increasing from $11.4 million to $11.58 million per person.40% federal estate and gift tax
- The annual gift tax exclusion will remain at $15,000 per recipient in 2020.
- The dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is increasing $50 to a maximum of $2,750 for the year.
- If you qualify for a Health Savings Account…the individual maximum has increased to $3,550 and the family plan maximum has increased to $7,100. Remember, HSA balances can be rolled over from one year to the next and can grow tax free.
For additional information on these tax changes or for your tax planning questions, please contact your Relationship Manager.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. Where applicable, all data and information has been gathered from sources believed to be accurate such as the internet, non-affiliated 3rd parties, news articles and professional subscriptions but this information is not warranted to be correct, complete or true. Vantage Financial Partners Limited, Inc. and its agents are not tax advisors or accountants. We strongly encourage you review your tax situation, opportunities and liabilities with your tax advisor before making any changes. This article is not intended as tax advice.