IRS Tax Brackets

IRS has recently released the tax brackets for 2020. There are seven different tax rate brackets in 2020’s list just like the previous year but the income limits of the taxpayer have been changed.

These changes seem to be regular ones that were made as adjustments for the inflation of the year. There’s no relationship between this year’s changes and the major change that was made two years ago.

Before the tax year 2017, CPI (Consumer Price Index) was used by the IRS to calculate the year’s inflation. With the release of the Tax Cuts and Jobs Act in 2017, C-CPI (Chained Consumer Price Index) has been used to adjust deductions, thresholds, credits, etc.

  • Consumer Price Index (CPI): The weighted average of goods, services consumed by

We would like to show you what kind of differences there are between the 2019 and the 2020 tax bracket lists in our post. We only used Single Filer and Married Filing Jointly tax brackets as samples to make it clear easily :

Tax Rate 2019 ( % )Single Filer Taxable Income ( $ )Married Filing Jointly Taxable Income ( $ )
100 – 9,5250 – 19,050
129,526 – 38,70019,051 – 77,400
2238,701 – 82,50077,401 – 165,000
2482,501 – 157,500165,001 – 315,000
32157,501 – 200,000315,001 – 400,000
35200,001 – 500,000400,001 – 600,000
37over 500,00over 600,000
Tax Rate 2020 ( % )Single Filer Taxable Income ( $ )Married Filing Jointly Taxable Income ( $ )
100 – 9,8750 – 19,750
129,876 – 40,12519,751 – 80,250
2240,126 – 85,52580,251 – 171,050
2485,526 – 163,300171,051 – 326,600
32163,301 – 207,350326,601 – 414,700
35207,351 – 518,400414,701 – 622,050
37more than 518,400more than 622,050

When you take a look at the changes in the numbers, you can easily notice that the differences between the years are the consequences of inflation. We know that changing the tax rates is a nice tool for shaping the politics in the country but the last changes were nothing but just adjustments.

Additional Notes

  • The gift tax exclusion will be $15,000 for the tax year 2020 meaning your first $15,000 of your gifts received are tax-free.
  • The estate tax exclusion is $11.58 million for the tax year 2020. It was $11.4 million for the tax year 2019.

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