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Inflation Adjustments for TY2019

The IRS announced the tax year 2019 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. The tax items of greatest interest to most taxpayers include: 

  • The standard deduction for married filing jointly rises to $24,400 for tax year 2019, up from $24,000 in 2018. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,200 for 2019, up from $12,000. For heads of households, the standard deduction will be $18,350 for 2019, up from $18,000 in 2018.
  • The personal exemption for tax year 2019 remains at $0 (zero), as it was for 2018.
  • For 2019, the tax brackets are:
    • 10% for single individuals with incomes of $9,700 or less ($19,400 for married couples filing jointly)
    • 12% for single individuals with incomes over $9,700 ($19,400 for married couples filing jointly)
    • 22% for single individuals with incomes over $39,475 ($78,950 for married couples filing jointly)
    • 24% for single individuals with incomes over $84,200 ($168,400 for married couples filing jointly)
    • 32% for single individuals with incomes over $160,725 ($321,450 for married couples filing jointly)
    • 35% for single individuals with incomes over $204,100 ($408,200 for married couples filing jointly)
    • 37% for single individuals with incomes over $510,300 ($612,350 for married couples filing jointly)
  • For calendar year 2019, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is 0, per the TCJA; for 2018 the amount was $695. Note that Massachusetts residents still have a state minimum essential health coverage mandate.
  • For the taxable years beginning in 2019, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,700, up $50 from the limit for 2018.
  • For tax year 2019, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $116,000, up from $114,000 for tax year 2018.
  • The annual exclusion for gifts is $15,000 for calendar year 2019, as it was for calendar year 2018.
  • The earned income credit increases from $6,431 to $6,557 for taxpayers filing jointly, who have three or more qualifying children.
  • The adoption credit increases in 2019 to $14,080, up from $13,810 in 2018.
  • Raises the alternative minimum tax (AMT) exemption amount increases from $70,300 to $71,700. The phase-out threshold increases from $500,000 to $510,300. But for married couples filing jointly, the AMT exemption amount increases from $109,400 to $111,700, and the phase-out threshold increases from 1 million dollars to $1,020,600.
  • Increases the qualified business income threshold under §199A(e)(2) to $321,400 for married individuals filing jointly, $160,725 for married individuals filing separately, and $160,700 for single individuals and heads of household (from $315,000 for joint returns and $157,500 for other taxpayers in 2018).
  • Raises $11,180,000 basic exclusion amount for estates of decedents who die in 2018 to $11,400,000 for estates of decedents who die in 2019.
  • For 2019, the foreign earned income exclusion is $105,900 up from $103,900 for TY2018.
  • Increases the monthly limitation for the qualified transportation fringe benefit from $260 to $265.