The rewrite of the tax code kept seven tax brackets, but dropped nearly all of the rates. While the bottom rate remains at 10%, the highest rate fell to 37%, from the 39.6% it has been in years past. The income limits for all tax brackets are adjusted each year for inflation. Below are the federal tax brackets and rates you can expect for tax year 2020.
Table for Tax Brackets and Rates
|Rate||Unmarried Individuals with Taxable Income Over||Married Individuals Filing Jointly with Taxable Income Over||Heads of Households with Taxable Income Over|
One of the largest changes seen in new tax law, was the repeal of personal exemptions ($4,050 for yourself, your spouse and each of your dependents) and the significant increase in the standard deduction. Changes to deductions, including the $10,000 cap on state, local and property tax deductions has left more people taking the standard deduction than itemizing their deductions as they have done in the past.
2020 Table for Standard Deduction
|Married, Filing Jointly||$24,800|
|Head of Household||$18,650|
*With the new tax code personal exemptions are eliminated, but the child tax credit has increased to $2,000 per child under 17 years old and a $500 credit for non-child dependents. The child tax credit is potentially refundable, with tax filers benefiting from the credit even if they do not have any tax liability (up to $1,400 per child).
You can estimate your 2020 federal tax liability by using our calculator. Also, look further at whether to itemize or take the standard deduction.
*Updated July 2020