New Income Tax Brackets in 2020

Tax season begins very soon, so it’s about time you took a closer look at IRS rules and regulations surrounding this year’s tax brackets. Knowing your tax bracket enables you to formulate a game plan with your finances, and the manner in which you should decide to file.

 

Since tax brackets in the United States are marginal, your income will be taxed at different rates. For example, if you are married and filing jointly after earning $80,000 in 2019, you will be taxed at 10% for the first $19,750, and any income over that amount will be taxed at 12%. 

 

Depending on how close you are to the divide between one bracket and another, there’s a possibility for you to write off some of your income so that you’re categorized at a lower level – enabling you to save a little money starting off the new year. This article covers the tax bracket changes for 2020, which will go into effect in 2021 when you are filing your 2020 taxes. 

 

Here’s an overview of the different tax brackets, and how they pan out for the various filing methods available: 

 

Married Filing Jointly

  • 10%: Taxable income up to $19,750
  • 12%: Income between $19,750 to $80,250
  • 22%: Income between $80,250 to $171,050
  • 24%: Income between $171,050 to $326,600
  • 32%: Income between $326,600 to $414,700
  • 35%: Income between $414,700 to $622,050
  • 37%: Income over $622,050

 

Unmarried Individuals

  • 10%: Up to $9,875
  • 12%: Income between $9,875 to $40,125
  • 22%: Income between $40,125 to $85,525
  • 24%: Income between $85,525 to $163,300
  • 32% Income between $163,300 to $207,350
  • 35%: Income between $207,350 to $518,400
  • 37%: Income over $518,400

 

Heads Of Households

  • 10%: Up to $14,100
  • 12%: Income between $14,100 to $53,700
  • 22%: Income between $53,700 to $85,500
  • 24%: Income between $85,500 to $163,300
  • 32%: Income between $163,300 to $207,350
  • 35%: Income between $207,350 to $518,400
  • 37%: Income over $518,400

 

Married Filing Separately

  • 10%: Up to $9,875
  • 12%: Income between $9,875 to $40,125
  • 22%: Income between $40,125 to $85,525
  • 24%: Income between $85,525 to $163,300
  • 32%: Income between $163,300 to $207,350
  • 35% Income between $207,350 to $311,025
  • 37%: Income over $311,025

 

Overall, tax brackets for 2020 haven’t been changed too much, except for being adjusted for inflation. As always, we recommend working with a professional when filing your taxes, as they could easily save you time and many during the filing process thanks to their extensive experience and knowledge on the subject. If you’d like to learn more about standard deductions in 2020 as well, check out the IRS’ release here.  

 

If you would like to learn more about how we can help you and your business improve its accounting practices, reach out to our team. For more information on other accounting topics, check out our blog.