United States

2020 Inflation adjustments for individuals, trusts and estates

TAX ALERT  | 

On Nov. 6, 2019, the IRS released Rev. Proc. 2019-44 which sets forth inflation adjustments for taxable years beginning in 2020. Some of the key adjustments are presented below: 

Tax rate tables:

Married individuals filing joint returns and surviving spouses

If taxable income is:

The tax is:

Not over $19,750

10% of the taxable income

Over $19,750 but not over $80,250

$1,975 plus 12% of the excess over $19,750

Over $80,250 but not over $171,050

$9,235 plus 22% of the excess over $80,250

Over $171,050 but not over $326,600

$29,211 plus 24% of the excess over $171,050

Over $326,600 but not over $414,700

$66,543 plus 32% of the excess over $326,600

Over $414,700 but not over $622,050

$94,735 plus 35% of the excess over $414,700

Over $622,050

$167,307.50 plus 37% of the excess over $622,050

 

Unmarried individuals (other than heads of households and surviving spouses)

If taxable income is:

The tax is:

Not over $9,875

10% of the taxable income

Over $9,875 but not over $40,125

$987.50 plus 12% of the excess over $9,875

Over $40,125 but not over $85,525

$4,617.50 plus 22% of the excess over $40,125

Over $85,525 but not over $163,300

$14,605.50 plus 24% of the excess over $85,525

Over $163,300 but not over $207,350

$33,271.50 plus 32% of the excess over $163,300

Over $207,350 but not over $518,400

$47,367.50 plus 35% of the excess over $207,350

Over $518,400

$156,235 plus 37% of  the excess over $518,400

 

For heads of households

If taxable income is:

The tax is:

Not over $14,100

10% of the taxable income

Over $14,100 but not over $53,700

$1,410 plus 12% of the excess over $14,100

Over $53,700 but not over $85,500

$6,162 plus 22% of the excess over $53,700

Over $85,500 but not over $163,300

$13,158 plus 24% of the excess over $85,500

Over $163,300 but not over $207,350

$31,830 plus 32% of the excess over $163,300

Over $207,350 but not over $518,400

$45,926 plus 35% of the excess over $207,350

Over $518,400

$154,793.50 plus 37% of the excess over $518,400

 

Married individuals filing separate returns

If taxable income is:

The tax is:

Not over $9,875

10% of the taxable income

Over $9,875 but not over $40,125

$987.50 plus 12% of the excess over $9,875

Over $40,125 but not over $85,525

$4,617.50 plus 22% of the excess over $40,125

Over $85,525 but not over $163,300

$14,605.50 plus 24% of the excess over $85,525

Over $163,300 but not over $207,350

$33,271.50 plus 32% of the excess over $163,300

Over $207,350 but not over $311,025

$47,367.50 plus 35% of the excess over $207,350

Over $311,025

$83,653.75 plus 37% of the excess over $311,025

 

Estates and trusts

If taxable income is:

The tax is:

Not over $2,600

10% of the taxable income

Over $2,600 but not over $9,450

$260 plus 24% of the excess over $2,600

Over $9,450 but not over $12,950

$1,904 plus 35% of the excess over $9,450

Over $12,950

$3,129 plus 37% of the excess over $12,950

 

Standard deduction:

Filing status

Standard deduction

Married Individuals Filing Joint Returns and Surviving Spouses

$24,8001

Heads of Households

$18,6502

Unmarried Individuals (other than Surviving Spouses and Heads of Households)

$12,4002

Married Individuals Filing Separate

$12,4001

1 Additional standard deduction for the aged or blind is $1,300

2 Additional standard deduction for the aged or blind is $1,650

Alternative minimum tax exemption:

Filing status

Exemption

Joint returns or surviving spouses

$113,400

Unmarried individuals (other than surviving spouses)

$72,900   

Married individuals filing separate returns

$56,700 

Estates and trusts

$25,400

 

Maximum capital gains rates:

Rate

Joint or surviving spouse

Married filing separate

Head of household

Unmarried individuals

Estates and trusts

0%

Not over $80,000

Not over $40,000

Not over $53,600

Not over $40,000

Not over $2,600

15%

Over $80,000 but not over $496,600

Over $40,000 but not over $248,300

Over $53,600 but not over $469,050

Over $40,000 but not over $441,450

Over $2,600 but not over $13,150

20%

Over $496,600

Over $248,300

Over $469,050

Over $441,450

Over $13,150

 

Estate, gift and generation-skipping (GST) tax:

The annual gift and GST tax exclusion remains unchanged from 2019 at $15,000 per donee.

The estate, gift and GST exemptions for 2020 are increased to $11,580,000.

Action Items:

The additional $180,000 estate tax exemption provides an immediate opportunity to transfer wealth or repair any prior estate, gift or generation skipping transfer planning that has not gone as planned, but keep in mind the higher exemption sunsets at the end of 2025.

A more proximate threat to the increased exemption is the current Democratic candidates’ proposals. Their current positions surrounding death taxes are taking shape by increasing the rate, changing to a progressive death tax system, and decreasing the estate tax exemption.

Now is a good time to revisit current estate plans and work with the estate planning team to make sure flexibility and the effective use of the exemption is still taking place and is consistent with the goals. While additional gifting may not be the answer, now is a good time to reassess the trajectory of the estate plan and make any necessary course corrections.

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