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.