IRS Releases 2020 Inflation-Adjusted Tax Tables, Standard Deduction, AMT and Other Amounts

07 November 2019

The IRS has released the annual inflation adjustments for 2020 for the income tax rate tables, plus more than 50 other tax provisions. The IRS makes these cost-of-living adjustments (COLAs) each year to reflect inflation.

2020 Income Tax Brackets

For 2020, the highest income tax bracket of 37 percent applies when taxable income hits:

  • $622,050 for married individuals filing jointly and surviving spouses,
  • $518,400 for heads of households,
  • $311,025 for single individuals and married individuals filing separately, and
  • $12,950 for estates and trusts.

2020 Standard Deduction

The standard deduction for 2020 is:

  • $24,800 for married individuals filing jointly and surviving spouses,
  • $18,650 for heads of households, and
  • $12,400 for single individuals and married individuals filing separately.

The standard deduction for a dependent is limited to the greater of:

  • $1,000 or
  • the sum of $350, plus the dependent’s earned income.

Individuals who are blind or at least 65 years old get an additional standard deduction of:

  • $1,300 for married taxpayers and surviving spouses, or
  • $1,650 for other taxpayers.

Alternative Minimum Tax (AMT) Exemption for 2020

The AMT exemption for 2020 is:

  • $113,400 for married individuals filing jointly and surviving spouses,
  • $72,900 for single individuals and heads of households,
  • $56,700 for married individuals filing separately, and
  • $25,400 for estates and trusts.

The exemption amounts phase out in 2020 when AMTI exceeds:

  • $1,036,800 for married individuals filing jointly and surviving spouses,
  • $518,400 for single individuals, heads of households, and married individuals filing separately, and
  • $84,800 for estates and trusts.

Expensing Code Sec. 179 Property in 2020

For tax years beginning in 2020, taxpayers can expense up to $1,040,000 in section 179 property. However, this dollar limit is reduced when the cost of section 179 property placed in service during the year exceeds $2,590,000.

Estate and Gift Tax Adjustments for 2020

The following inflation adjustments apply to federal estate and gift taxes in 2020:

  • the gift tax exclusion is $15,000 per donee, or $157,000 for spouses who split gifts;
  • the federal estate tax exclusion is $11,580,000; and
  • the maximum reduction for real property under the special valuation method is $1,180,000.

2020 Inflation Adjustments for Other Tax Items

The maximum foreign earned income exclusion in 2020 is $11,580,000.

The IRS also provided inflation-adjusted amounts for the:

  • adoption credit,
  • lifetime learning credit,
  • earned income credit,
  • excludable interest on U.S. savings bonds used for education,
  • various penalties, and
  • many other provisions.

Effective Date of 2020 Adjustments

These inflation adjustments generally apply to tax years beginning in 2020, so they govern most returns filed in 2021. However, some specified figures apply to transactions or events in calendar year 2020.