The Federal Tax Brackets increases are highly dependent on the changes to the cost of living, changes to the tax system, and the inflation rate. Although the increase in the tax brackets is going to be very similar to the standard deduction increase, it is a way for the IRS to balance out the tax code of the United States.
Whether the bracket increase places you in a different marginal tax rate or not, you are likely to pay the same the tax bill if your income remains the same as last year.
Tax Bracket Increase from 2019 is 1.6% on average
The tax bracket increase from 2019 to 2020 is about 1.5% to 1.7% for most marginal tax rates. Given that the standard deduction increase is pretty much the same unless a big life event happened, you are going to pay a similar percentage of your income in taxes as last year.
The overall increase in tax brackets is going to affect people in the higher brackets. We’re talking about taxpayers who pay 32 percent, 35 percent, and 37 percent of their incomes in taxes rather than the ones who are below these marginal rates. Since there hasn’t been an increase in itemized deductions, your tax bill should be slightly higher if you’re going to claim the same deductions as last year.
The increase in your tax bill if you pay more than 32% of your income should be about 2 to 3%. It isn’t much but accounting the inflation rate from last year to this year, it all makes more sense.