2020 Tax Rates, Schedules and Contribution Limits

Here are the numbers and tables needed to prepare your 2019 tax returns.

Note: Federal and state tax filing deadlines in Indiana and Michigan have been extended three months to July 15 because of the coronavirus pandemic.

In making the announcement on March 20, Treasury Secretary Steven Mnuchin encouraged people who are set to receive refunds to file earlier so they can get their money more quickly.

Income Tax

Married/Filing Jointly or Qualifying Widow(er)s

If taxable income is over But not over The tax is Of the amount over
$0 $19,750 $0.00 + 10% $0
$19,750 $80,250 $1,975 + 12% $19,750
$80,250 $171,050 $9,235 + 22% $80,250
$171,050 $326,600 $29,211 + 24% $171,050
$326,600 $414,700 $66,543 + 32% $326,600
$414,700 $622,750 $94,735 + 35% $414,700
$622,050 - $167,307.50 + 37% $622,050

 

Single

If taxable income is over But not over The tax is Of the amount over
$0 $9,875 $0.00 + 10% $0
$9,875 $40,125 $987.50 + 12% $9,875
$40,125 $85,525 $4,617.50 + 22% $40,125
$85,525 $163,300 $14,605.50 + 24% $85,525
$163,300 $207,350 $33,271.50 + 32% $163,300
$207,350 $518,400 $47,367.50 + 35% $207,350
$518,400 - $156,235 + 37% $518,400

 

Estates and trusts

If taxable income is over But not over The tax is Of the amount over
$0 $2,600 $0.00 + 10% $0
$2,600 $9,450 $260 + 24% $2,600
$9,450 $12,950 $1,904 + 35% $9,450
$12,950 - $3,129 + 37% $12,950


Tax on corporations and other businesses

  • 21% tax rate applied on C-corporation income
  • Taxpayers may generally deduct up to 20% of the qualified business income (QBI) of S corporations, partnerships, and sole proprietorships (reduced by net capital gain and qualified dividends), subject to limitations:
    • Deduction generally not available for a Specified Service Trade or Business (SSTB) if taxable income exceeds $213,300 (single) or $426,600 (married/filing jointly); the deduction is subject to a phaseout unless taxable income is at or below $163,300 (single) or $326,600 (married/filingjointly)
    • If taxable income exceeds $213,300 (single) or $426,600 (married/filing jointly), the deduction is limited to the lesser of: (a) 20% of QBI or (b) the greater of (i) 50% of W-2 wages paid by each business or (ii) 25% of W-2 wages paid by each business plus 2.5% of the unadjusted basis of qualified property; wage and qualified property limitations are not applicable to taxable incomes at or below $163,300 (single) or $326,600 (married/filing jointly) and are fully phased in once taxable income exceeds $213,300 (single) or $426,600 (married/filing jointly)

Employer retirement plans

Sources: IRS and Social Security Administration updates, 2020.

 

Tax on capital gains and qualified dividends

Income

Single Married/Filing jointly/Qualifying widow(er) Tax rate
$0 - $40,000 $0 - $80,000 0%
Over $40,000 but not over $441,450 Over $80,000 but not over $496,600 15%
Over $441,450 Over $496,600 20%

Additional 3.8% federal net investment income (Nil) tax applies to individuals on the lesser of Nil or modified AGI in excess of $200,000 (single) or $2 50,000 (married/filingjointly and qualifying widow(er)s). Also applies to any trust or estate on the lesser of undistributed Nil or AGI in excess of the dollar amount at which the estate/trust pays income taxes at the highest rate (i.e., $12,950).

Kiddie Tax*

Child's unearned income above $2,200 is subject to the same tax schedule as estates and trusts (see charts above).

* Applies if either parent of the child is alive at the close of the taxable year, the child does not file a joint return for the taxable year, and the child either (a) has not attained age 18 by close of the year, (b) has attained age 18 before the close of the year, but the child's earned income represents not more than one half of support needs and the child has not attained age 19 by the close of the year, or (c) the child is a full-time student who has not attained age 24 as of the close of the year and the child's earned income represents not more than one half of support needs.

Preferential rates on long-term capital gains and qualified dividends are applicable at estate and trust preferential rates; 3.8% federal Nil tax is imposed separately on each child if modified AGI exceeds threshold amounts stated above.

Child tax credit

  • $2,000 per "qualifying child " (who has not attained age 17 during the year); phased out as income exceeds $400,000 (married/filing jointly) or $200,000 (all other); $1,400 per child is refundable
  • $500 nonrefundable credit for qualified dependents other than qualifying children (without limits)

Standard deductions

Filing Status Annual Additional
age 65+ or blind
Married/Filing jointly and qualifying widow(er)s $24,800 $1,300
Single $12,400 $1,650

 

Health savings accounts contribution limits

Filing Status Limit
Individual $3,550
Family $7,100

Catch-up contribution: Taxpayers who are 55 or older in 2020 may contribute an additional $1,000, or a total of $4,550 for individuals and $8,100 for families.

Deduction for mortgage interest

  • Deduction on interest for qualifying mortgages up to $750,000 ($375,000 if married/filing separately); homes under agreement before 12/15/17 for purchase prior to 1/1/18 (provided purchase occurred by 4/1/18) grandfathered under previous $1,000,000 ($500,000 if married/filing separately) limits.
  • Interest on home equity lines of credit (HELOC) deductible in certain cases where proceeds are utilized to acquire or improve a property.
     

Deduction for state and local taxes

Individuals may deduct state and local income (or sales) taxes and real and personal property taxes up to $10,000 or ($5,000 if married filing separately) in the aggregate.


Maximum Qualified Long-Term-Care insurance premiums eligible for deduction

Age 40 or less >40, ≤50 >50, ≤60 >60, ≤70 Over 70
2020 $430 $810 $1,630 $4,350 $5,430

 

Traditional IRAs

Maximum annual contribution (must be under age 70 1/2)

  • Lesser of compensation of $6,000
  • Up to $6,000 contribution can also be made for non-working spouse
  • Catch-up contributions (age 50 and over): $1,000

Traditional IRA deductibility table

Filing Status Covered by employer's
retirement plan
Modified AGI 2020 Modified AGI 2019 Deductibility
Single No Any amount Any amount Full
  Yes $65,000 or less $64,000 or less Full
  Yes $65,001 - $74,999 $64,001 - $73,999 Partial
  Yes $75,000 or more $74,000 or more None
Married/Jointly Neither spouse is Any amount Any amount Full
Married/Jointly Both spouses are $104,000 or less $103,000 or less Full
    $104,001 - $123,999 $103,001 - $122,999 Partial
    $124,000 or more $123,000 or more None
Married/Jointly Yes, but not spouse $104,000 or less $103,000 or less Full
    $104,001 - $123,999 $103,001 - $122,999 Partial
    $124,000 or more $123,000 or more None
Married/Jointly No, but spouse is $196,000 or less $193,000 or less Full
    $196,001 - $205,999 $193,001 - $202,999 Partial
    $206,000 or more $203,000 or more None

 

Roth IRAs

Maximum annual contribution

  • Lesser of compensation of $6,000
  • Up to $6,000 contribution can also be made for non-working spouse
  • Catch-up contributions (age 50 and over): $1,000

Contribution eligibility

Modified AGI is less than $124,000 (single) or $196,000 (married/filing jointly); phaseouts apply if modified AGI is $124,000 - $138,999 (single) or $196,000 - $205,999 (married/filing jointly).

Deductibility

Contributions to Roth IRAs are not deductible.

Conversion eligibility

There is no income restriction on eligibility for a Roth IRA conversion.

Social Security Benefit

Base amount of modified AGI causing Social Security benefits to be taxable

Filing Status Up to 50% taxable Up to 85% taxable
Married/Filing jointly $32,001 - $44,000 >$44,000
Single $25,001 - $34,000 >$34,000

 

Maximum earnings before Social Security benefits are reduced

* Interim annual limit of $48,600 applies for months prior to attaining full retirement age during year individual reaches full retirement age ($1 withheld for every $3 above limit).

This information is general in nature and is not meant as tax or legal advice. Tax laws are subjectto change. Please consult your legal or tax advisor.

Maximum compensation subject to FICA taxes

OASDI and HI tax rate: 12.4% OASDI and 2.9% HI (15.3% combined) for self- employed; 6.2% and1.45% (7.65% combined) for employees. An additional 0.9% HI tax applies on individuals with wages or self-employment income in excess of $200,000 (single and qualifying widow(er)s) or $250,000 (married/ filing jointly).
 

Death/gifts occurring in 2020*

(Subtract applicable credit from calculated tax)

If gift/gross is over But not over The tax is Of the amount over
$0 $10,000 $0 + 18% $0
$10,000 $20,000 $1,800 + 20% $10,000
$20,000 $40,000 $3,800 + 22% $20,000
$40,000 $60,000 $8,200 + 24% $40,000
$60,000 $80,000 $13,000 + 26% $60,000
$80,000 $100,000 $18,200 + 28% $80,000
$100,000 $150,000 $23,800 + 30% $100,000
$150,000 $250,000 $38,800 + 32% $150,000
$250,000 $500,000 $70,800 + 34% $250,000
$500,000 $750,000 $155,800 + 37% $500,000
$750,000 $1,000,000 $248,300 + 39% $750,000
$1,000,000 - $345,800 + 40% $1,000,000

* Annual gift tax exclusion: individual, $15,000; married electing split gifts, $30,000.

Combined lifetime gift tax and gross estate tax exemption: $11,580,000
GST tax exemption: $11,580,000

Higher education tax credits

Modified AGI phaseouts for American Opportunity Tax Credit

 

AGI phaseouts for Lifetime Learning Credit

 

2020 AMT exemptions

Phases out beginning with alternative minimum taxable income over $1,036,800 (married/filing jointly and qualifying widow(er)s) or $518,400 (single filers); AMT ordinary income rate increases from 26% to 28% for alternative minimum taxable income over $197,900 (married/filing jointly and qualifying widow(er)s, single, and estates and trusts).