IRS Issues Inflation Adjustments for 2019

November 15, 2018


On November 15, 2018, IRS issued its inflation adjustments for the 2019 tax year. More than 60 tax provisions are impacted by the adjustments listed in Rev. Proc. 2018-57. Highlights include the following:

  • The standard deduction for married filing jointly moves to $24,400, to $12,200 for single taxpayers and married individuals filing separately, and to $18,350 for heads of households.
  • Because of the Tax Cuts and Jobs Act, the personal exemption for tax year 2019 remains at 0.
  • For tax year 2019, the individual income tax brackets change as follows:
    • 37 percent for individual single taxpayers with incomes greater than $510,300 ($612,350 for married couples filing jointly).
    • 35 percent, for incomes over $204,100 ($408,200 for married couples filing jointly);
    • 32 percent for incomes over $160,725 ($321,450 for married couples filing jointly);
    • 24 percent for incomes over $84,200 ($168,400 for married couples filing jointly);
    • 22 percent for incomes over $39,475 ($78,950 for married couples filing jointly);
    • 12 percent for incomes over $9,700 ($19,400 for married couples filing jointly).
    • 10 percent for incomes of single individuals with incomes of $9,700 or less ($19,400 for married couples filing jointly)
  • The Alternative Minimum Tax exemption amount for tax year 2019 is $71,700 and begins to phase out at $510,300 ($111,700, for married couples filing jointly for whom the exemption begins to phase out at $1,020,600).
  • The maximum Earned Income Credit amount is $6,557 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,431 for tax year 2018.
  • The individual shared responsibility payment is 0 for calendar year 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.
  • Participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,350, an increase of $50 from tax year 2018; but not more than $3,500, an increase of $50 from tax year 2018. For self-only coverage, the maximum out-of-pocket expense amount is $4,650, up $100 from 2018. For tax year 2019, participants with family coverage, the floor for the annual deductible is $4,650, up from $4,550 in 2018; however, the deductible cannot be more than $7,000, up $150 from the limit for tax year 2018. For family coverage, the out-of-pocket expense limit is $8,550 for tax year 2019, an increase of $150 from tax year 2018.
  • 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 foreign earned income exclusion is $105,900 up from $103,900 for tax year 2018.
  • Estates of decedents who die during 2019 have a basic exclusion amount of $11,400,000, up from a total of $11,180,000 for estates of decedents who died in 2018.
  • The annual exclusion for gifts is $15,000 for calendar year 2019, as it was for calendar year 2018.
  • The maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $14,080, up from $13,810 for 2018.
  • The income thresholds for the 199A deduction increase to $160,700 for single and head of household returns, $160,725 for married filing separately, and $321,400 for married filing jointly.
  • The penalties for failure to file a partnership or S Corporation return increase to $205 per partner/shareholder per month.
  • The Section 179 deduction increases to $1,020,000 with a $2,550,000 limitation.
  • The gross receipts test for purposes of determining eligibility to use cash accounting increases to $26,000,000.

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