On November 15, IRS announced tax year 2019 annual inflation adjustments for more than 60 tax provisions, including tax rate schedules and other tax changes. Among other changes, the inflation adjustments include the following:

  • The standard deduction
    • increases from $24,000 to $24,400 for taxpayers who are married but file jointly
    • rises from $12,000 to $12,200 for single taxpayers and married individuals filing separately
    • increases from $18,000 to $18,350 for heads of households.
  • The earned income credit increases from $6,431 to $6,557 for taxpayers filing jointly, who have three or more qualifying children.
  • The adoption credit increases from $13,810 to $14,080.
  • Per TCJA changes, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage in calendar year 2019 is reduced from $695 to zero.
  • Raises the alternative minimum tax (AMT) exemption amount increases from $70,300 to $71,700. The phase-out threshold increases from $500,000 to $510,300. But for married couples filing jointly, the AMT exemption amount increases from $109,400 to $111,700, and the phase-out threshold increases from 1 million dollars to $1,020,600.
  • Sets the §179 amount will be $1,020,000 with a phase-out threshold of $2,550,000.
  • Increases the qualified business income threshold under §199A(e)(2) to $321,400 for married individuals filing jointly, $160,725 for married individuals filing separately, and $160,700 for single individuals and heads of household (from $315,000 for joint returns and $157,500 for other taxpayers in 2018).
  • Raises $11,180,000 basic exclusion amount for estates of decedents who die in 2018 to $11,400,000 for estates of decedents who die in 2019.
  • Increases the monthly limitation for the qualified transportation fringe benefit from $260 to $265.
  • Raises the dollar limitation for employee salary reductions for contributions to HSAs from $2,650 to $2,700.
  • And various penalty amounts for failure to file tax and information returns or furnish payee statements are also adjusted for inflation for 2019.