Each year, the IRS issues inflation adjustments for more than 50 tax provisions, including the tax rate schedules and other tax changes. Generally, these provisions are used to file tax year 2018 returns in 2019. These, of course, assume no significant tax law changes.
Among the adjustment are the following:
• The standard deduction for married filing jointly rises to $13,000, up $300 from 2017. For single taxpayers and married individuals filing separately, the standard deduction rises to $6,500 up $150.
• The personal exemption for tax year 2018 rises to $4,150, an increase of $100.
• The 39.6% tax rate affects single taxpayers whose income exceeds $426,700 and affects married filing joint taxpayers whose income exceeds $480,050.
• Estates of decedents who died in 2018 have a basic exclusion amount of $5,600,000, up from $5,490,000 for estates of decedents who died in 2017.
• The annual gift tax exclusion increases to $15,000, an increase of $1,000 from the exclusion in 2017.
• The limit on elective deferrals for contributions to 401(k) and 403(b) plans increases to $18,500, up $500. The catch-up contribution for those 50 and older remains at $6,000.
• The maximum amount that an individual can contribute to a defined contribution plan increases to $55,000, up $1,000 from last year.