New Tax Law Changes You Need to Know [Updated for 2020]

>tax law changes

Getting psyched to do your taxes? I suppose if you’re expecting a refund you might be.

Or if you’re kind of a tax nerd like me, you might take some pleasure in breaking down the tables and watching the software do its thing. In either case, here are the tax law changes that apply to the 2019 tax year. Please note, these are the changes that affect the taxes you will be filing in 2020. (Income you earned in 2019.)

New Tax Rules for 2019 (Filed in 2020)

Let’s start with the U.S. federal income tax brackets. There were slight changes for inflation, but no major changes from last year:

Tax RateMarried Filing JointlyMost Single Filers
10%$0-$19,400$0-$9,700
12%$19,401-$79,950$9,701-$39,475
22%$78,951-$168,400$39,476-$84,200
24%$168,401-$321,450$84,201-$160,725
32%$321,451-$408,200$160,726-$204,100
35%$408,201-$612,350$204,101-$510,300
37%$612,351+$510,301+

In addition, here are the other important changes that will most likely affect your taxes:

  • The standard deduction increased slightly for 2019. It is now $12,200 for single filers, $24,400 for married filers, and $18,350 for heads of household. Here’s more info on the standard deduction.
  • The child tax credit remained $2,000, and the amount of the credit that is refundable is still $1,400, with the phaseout threshold for married couples at $400,000 and $200,000 for single filers.
  • The maximum earned income tax credit rose to $6,557, and the maximum income limit for the credit rose to $55,952.
  • The foreign earned income exclusion rose slightly to the amount of $105,900.
  • The standard mileage rate you can expense if you use your car for business has gone up to 58 cents per mile, so keep track of your mileage.

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Related: How Long Will it Take to Get Your Tax Refund

More Details About 2019 Tax Changes

The Tax Cuts and Jobs Act of 2017 repealed the tax penalty associated with the Affordable Care Act (aka Obamacare), which means that people who did not buy health insurance will no longer pay a tax penalty. This change did not officially go into effect until 2019, so this will affect your taxes for the first time this year. However, some states have enacted their own penalties, so be sure to double-check your state laws.

Increased Standard Deduction – For the tax year 2019, the standard deductions for all peeps increased slightly.

  • Married filing jointly is $24,400
  • Single is $12,200
  • Head of household is $18,350

The Savers Credit AGI Was Increased Again – They keep making this saver’s credit easier and easier to get into. The adjusted gross income (AGI) limits are now:

  • Married filing jointly is $64,000
  • Head of household is $48,000
  • Single filers is $32,000

Nice that they keep making it easier for folks to save through this credit. I’d love to see stats on the number of people using this credit.

Here’s more information about the Savers Credit if you are interested.

Retirement Contributions for 2019

Retirement contributions also increased slightly for 2019. 401(k) and 403(b) contributions are up to $19,000 for 2019, with a $6,000 catch up contribution allowed for those 50 and over. SEP IRA and Solo 401(k) contribution limits increased to $56,000 for 2019.

Both Roth and Traditional IRA’s contribution limits increased to $6,000 with a $1,000 catch up contribution the 50+ crowd. The income phaseouts increased slightly as well.

For Traditional IRAs single people (and heads of households) who have access to an employer plan can earn up to $64,000 before the deductibility of your contributions is affected.

If you are married and only one spouse has earned income and that spouse has access to an employer plan, the phase-out begins at $103,000. For married couples where both spouses work, but only one has access to an employer plan, the income phase-out limits begin at $193,000.

Roth IRA phase-outs are much simpler. For married couples, the phase-out begins at $193,000. For single people and heads of household, the phase-out limits begin at $122,000 for the 2019 tax year.

Retirement Contributions for 2020

If you want to plan ahead and contribute evenly over the year to your retirement accounts in 2020 you’ll need to know about the upcoming increases.

401(k) and 403(b) contributions are going up to $19,500, with catch up contributions of $6,500 for those 50 and over.

IRA contribution limits for both Traditional and Roth remain the same for 2020 at $6,000 with $1,000 catch up contribution if you are 50 or older.

Hey kids, this year the absolute last day to file 2019 taxes (that is, your federal personal income taxes) is Wednesday, July 15th, 2020. 

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.

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  1. Unfortunately, no. Nothing really new on the credit side of things. Several credit reductions. 🙁

  2. Bummer! Are there any new and exciting tax credits for 2011?