What Do the 2019 Tax Rates Mean for You?

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The Internal Revenue Service (IRS) recently published the 2019 inflation amendments for various tax provisions, such as cost of living and the tax rate tables. If you're wondering how these adjustments will impact you, read on for our lowdown on the numbers you'll need to take into consideration when preparing your 2020 tax returns.

You can access the latest US tax calculator here.

Tax Brackets and Tax Rates. The figures that everyone are most interested in are the seven tax rates and brackets for 2019. These are 10%, 12%, 22%, 24%, 32%, 35% and 37% (in addition to a zero rate). You can find full details of the new 2019 tax rates and brackets here.

Standard Deduction Amounts. Single taxpayers and those married individuals who file separately can now benefit from an increased standard deduction amount of $12,200 (representing a $200 increase). Married people who file a joint submission benefit from an increase of $400 to $24,400, while heads of household earners will benefit from an increase of $350 to $18,350. The additional standard deduction amount for unmarried people will increase to $1,650.

For 2019, the aged or blind will have an additional standard deduction of $1,300.

For 2019, the standard deduction amount that will be available to taxpayers claiming on behalf of a dependent will not exceed $1,100 or $350 and that person's earned income (whichever is lower).

Under the provisions of the Tax Cuts and Jobs Act (TCJA) the personal exemption for 2019 will remain at $0.

The alternative minimum tax exemption for 2019 is $71,700. This starts to phase out at $510,300 for single taxpayers. The alternative minimum tax exemption for 2019 for married couples who file jointly is $111,700, which starts to phase out at $1,020,600.

In addition to the standard deduction amounts, additional tax credits and deductions have been amended for 2019 or have been modified according to the tax reform law. A summary of these is presented below:

Earned Income Tax Credit (EITC). The EITC will be $6,557 for taxpayers who submit a joint return or who have three or more eligible children. This represents an increase of $126 on the previous year. You can find the most recent version of the EITC calculator here.

Child Tax Credit. The child tax credit has been increased to $2,000 for every eligible child and can be refunded up to a maximum of $1,400, depending on phaseouts. The amendments also include a provisional $500 non-refundable credit for all other eligible dependents. Phaseouts are not indexed for inflation and will commence when the minimum adjusted gross income levels are met. This is $400,000 for married taxpayers who submit joint returns and $200,000 for all other taxpayers with dependents.

Student Loan Interest Deduction. There is no change in 2019 in terms of the highest amount taxpayers can deduct for interest paid on student loans, and it remains at $2,500. Those taxpayers who have a MAGI in excess of $70,000 ($140,000 for joint returns) are subject to a phaseout and it is completely phased out for those who have a MAGI of $85,000 or more ($170,000 or more for joint returns).