2019 Tax Brackets

On a yearly basis the IRS adjusts more than 40 taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. provisions for inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. . This is done to prevent what is called “bracket creepBracket creep occurs when inflation pushes taxpayers into higher income tax brackets or reduces the value of credits, deductions, and exemptions. Bracket creep results in an increase in income taxes without an increase in real income. Many tax provisions—both at the federal and state level—are adjusted for inflation. ,” when people are pushed into higher income tax brackets or have reduced value from credits and deductions due to inflation, instead of any increase in real income.

The IRS used to use the Consumer Price Index (CPI) to calculate the past year’s inflation.[1] However, with the Tax Cuts and Jobs Act of 2017, the IRS will now use the Chained Consumer Price Index (C-CPI) to adjust income thresholds, deduction amounts, and credit values accordingly.[2]

Income Tax Brackets and Rates

In 2019, the income limits for all tax bracketsA tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat. and all filers will be adjusted for inflation and will be as follows (Tables 1). The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $510,300 and higher for single filers and $612,350 and higher for married couples filing jointly.

2019 Tax Brackets for Single Filers, Married Couples Filing Jointly, and Heads of Households

Rate	For Unmarried Individuals, Taxable Income Over	For Married Individuals Filing Joint Returns, Taxable Income Over	For Heads of Households, Taxable Income Over
10%	Up to $9,700	Up to $19,400	Up to $9,700
12%	$9,701 to $39,475	$19,401 to $78,950	$13,851 to $52,850
22%	$39,476 to $84,200	$78,951 to $168,400	$52,851 to $84,200
24%	$84,201 to $160,725	$168,401 to $321,450	$84,201 to $160,700
32%	$$160,726 to $204,100	$321,451 to $408,200	$160,701 to $204,100
35%	$204,101 to $510,300	$408,201 to $612,350	$204,101 to $510,300
37%	Over $510,300	Over $612,350	Over $510,300

Standard Deduction and Personal Exemption

The standard deductionThe standard deduction reduces a taxpayer’s taxable income by a set amount determined by the government. It was nearly doubled for all classes of filers by the 2017 Tax Cuts and Jobs Act (TCJA) as an incentive for taxpayers not to itemize deductions when filing their federal income taxes. for single filers will increase by $200 and by $400 for married couples filing jointly (Table 2).

The personal exemption for 2019 remains eliminated.

Table 2. 2019 Standard Deduction and Personal Exemption

Filing Status	Deduction Amount
Single	$12,200
Married Filing Jointly	$24,400
Head of Household	$18,350

Alternative Minimum Tax

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two.

The AMT uses an alternative definition of taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income. called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent.

The AMT exemption amount for 2019 is $71,700 for singles and $111,700 for married couples filing jointly (Table 3).

Table 3. 2019 Alternative Minimum Tax Exemptions

Filing Status	Exemption Amount
Unmarried Individuals	$71,700
Married Filing Jointly	$111,700

In 2019, the 28 percent AMT rate applies to excess AMTI of $194,800 for all taxpayers ($97,400 for married couples filing separate returns).

AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2019, the exemption will start phasing out at $510,300 in AMTI for single filers and $1,020,600 for married taxpayers filing jointly (Table 4).

Table 4. 2019 Alternative Minimum Tax Exemption Phaseout Thresholds

Filing Status	Threshold
Unmarried Individuals	$510,300
Married Filing Jointly	$1,020,600

Earned Income Tax Credit

The maximum Earned Income Tax CreditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. in 2019 for single and joint filers is $529, if the filer has no children (Table 5). The maximum credit is $3,526 for one child, $5,828 for two children, and $6,557 for three or more children. All these are relatively small increases from 2018.

Table 5. 2019 Earned Income Tax Credit Parameters

Filing Status		No Children	One Child	Two Children	Three or More Children
Single or Head of Household	Income at Max Credit	$6,920	$10,370	$14,570	$14,570
	Maximum Credit	$529	$3,526	$5,828	$6,557
	Phaseout Begins	$8,650	$19,030	$19,030	$19,030
	Phaseout Ends (Credit Equals Zero)	$15,570	$41,094	$46,703	$50,162
Married Filing Jointly	Income at Max Credit	$6,920	$10,370	$14,570	$14,570
	Maximum Credit	$529	$3,526	$5,828	$6,557
	Phaseout Begins	$14,450	$24,820	$24,820	$24,820
	Phaseout Ends (Credit Equals Zero)	$21,370	$46,884	$52,493	$55,952

Child Tax Credit

The child tax credit totals at $2,000 per qualifying child and is not adjusted for inflation. However, the refundable portion of the Child Tax Credit, also known as the Additional Child Tax Credit, is adjusted for inflation. The Additional Child Tax Credit will remain at $1,400 for 2019.

Capital Gains

Long-term capital gains are taxed using different brackets and rates than ordinary income.

Table 6. 2019 Capital Gains Brackets

	For Unmarried Individuals, Taxable Capital Gains Over	For Married Individuals Filing Joint Returns, Taxable Capital Gains Over	For Heads of Households, Taxable Capital Gains Over
0%	$0	$0	$0
15%	$39,375	$78,750	$52,750
20%	$434,550	$488,850	$461,700

Qualified Business Income Deduction (Sec. 199A)

The Tax Cuts and Jobs Act includes a 20 percent deduction for pass-through businesses against up to $160,700 of qualified business income for unmarried taxpayers and $321,400 for married taxpayers (Table 7).

Table 7. 2019 Qualified Business Income Deduction Thresholds

Filing Status	Threshold
Unmarried Individuals	$160,700
Married Filing Jointly	$321,400

Annual Exclusion for Gifts

In 2019, the first $15,000 of gifts to any person are excluded from tax. The exclusion is increased to $155,000 for gifts to spouses.

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Notes

[1] Internal Revenue Service, “Revenue Procedure 2018-57,” https://www.irs.gov/pub/irs-drop/rp-18-57.pdf.

[2] Robert Cage, John Greenlees, and Patrick Jackman, “Introducing the Chained Consumer Price Index,” U.S. Bureau of Labor Statistics, May 2003, https://www.bls.gov/cpi/additional-resources/chained-cpi-introduction.pdf.

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