We haven't even finished 2019 yet, but already people are starting to look forward to 2020. As tax season ramps up in late January, taxpayers will begin to look at how much they're likely to owe to the federal government in income taxes for the 2019 tax year.
Yet even though there's still a while to go before tax season gets started, the IRS has already released the 2020 income tax brackets that will apply to next year's income. They look a lot like what the 2019 tax brackets did, except that they reflect some inflationary adjustments that take place nearly every year.
Image source: Getty Images.
How to read your bracket -- and what it means for your taxes
A lot of people think that their tax bracket determines the tax rate they'll pay on all their income. But that's not how it works. Tax brackets apply only to the income that falls within their range. For instance, if you're single with taxable income of $9,850, you're in the 10% tax bracket, and you'll pay tax of 10% of $9,850, or $985. However, if your taxable income goes up to $10,000, you'll move up to the 12% bracket. Some fear that means you'll pay $1,200 in taxes. But you only pay 12% taxes on the income from $9,875 to $10,000, or $125 of income. That leads to tax of $987.50 plus $15, or $1,002.50 in total.
Below, we'll look at the tax brackets that will apply for the 2020 tax year for various filing statuses.
2020 tax brackets for singles
If you're not married and don't qualify as a head of household or a surviving spouse, then you'll pay taxes using the following brackets:
|
Bracket |
Tax Is This Amount Plus This Percentage |
Of the Amount Over |
|---|---|---|
|
$0 to $9,875 |
$0 plus 10% |
$0 |
|
$9,875 to $40,125 |
$987.50 plus 12% |
$9,875 |
|
$40,125 to $85,525 |
$4,617.50 plus 22% |
$40,125 |
|
$85,525 to $163,300 |
$14,605.50 plus 24% |
$85,525 |
|
$163,300 to $207,350 |
$33,271.50 plus 32% |
$163,300 |
|
$207,350 to $518,400 |
$47,367.50 plus 35% |
$207,350 |
|
Above $518,400 |
$156,235 plus 37% |
$518,400 |
Data source: IRS.
2020 tax brackets for heads of household
Special head of household status comes if you're unmarried and provide a home and financial support for a qualifying relative, most commonly a child or parent. If you qualify, then your brackets are wider than for single filers, leading to lower taxes in many cases.
|
Bracket |
Tax Is This Amount Plus This Percentage |
Of the Amount Over |
|---|---|---|
|
$0 to $14,100 |
$0 plus 10% |
$0 |
|
$14,100 to $53,700 |
$1,410 plus 12% |
$14,100 |
|
$53,700 to $85,500 |
$6,162 plus 22% |
$53,700 |
|
$85,500 to $163,300 |
$13,158 plus 24% |
$85,500 |
|
$163,300 to $207,350 |
$31,830 plus 32% |
$163,300 |
|
$207,350 to $518,400 |
$45,926 plus 35% |
$207,350 |
|
Above $518,400 |
$154,793.50 plus 37% |
$518,400 |
Data source: IRS.
2020 tax brackets for married joint filers
Married couples who file jointly use the following tax brackets. They also apply to surviving spouses for a period of time following the death of a deceased spouse.
|
Bracket |
Tax Is This Amount Plus This Percentage |
Of the Amount Over |
|---|---|---|
|
$0 to $19,750 |
$0 plus 10% |
$0 |
|
$19,750 to $80,250 |
$1,975 plus 12% |
$19,750 |
|
$80,250 to $171,050 |
$9,235 plus 22% |
$80,250 |
|
$171,050 to $326,600 |
$29,211 plus 24% |
$171,050 |
|
$326,600 to $414,700 |
$66,543 plus 32% |
$326,600 |
|
$414,700 to $622,050 |
$94,735 plus 35% |
$414,700 |
|
Above $622,050 |
$167,307.50 plus 37% |
$622,050 |
Data source: IRS.
2020 tax brackets for married separate filers
If you're married, you also have the right to file separate returns. If you do so, then different brackets apply in which each threshold level is half the corresponding number for joint filers.
|
Bracket |
Tax Is This Amount Plus This Percentage |
Of the Amount Over |
|---|---|---|
|
$0 to $9,875 |
$0 plus 10% |
$0 |
|
$9,875 to $40,125 |
$987.50 plus 12% |
$9,875 |
|
$40,125 to $85,525 |
$4,617.50 plus 22% |
$40,125 |
|
$85,525 to $163,300 |
$14,605.50 plus 24% |
$85,525 |
|
$163,300 to $207,350 |
$33,271.50 plus 32% |
$163,300 |
|
$207,350 to $311,025 |
$47,367.50 plus 35% |
$207,350 |
|
Above $311,025 |
$83,653.75 plus 37% |
$311,025 |
Data source: IRS.
2020 tax brackets for trusts and estates
Many people don't realize that trusts and estates have to pay income taxes as well. Sometimes, trust and estate income gets carried out to those who receive distributions from them, but retained income typically gets taxed at trust rates. These brackets are also relevant for those who have children with unearned income above certain thresholds.
|
Bracket |
Tax Is This Amount Plus This Percentage |
Of the Amount Over |
|---|---|---|
|
$0 to $2,600 |
$0 plus 10% |
$0 |
|
$2,600 to $9,450 |
$260 plus 24% |
$2,600 |
|
$9,450 to $12,950 |
$1,904 plus 35% |
$9,450 |
|
Above $12,950 |
$3,129 plus 37% |
$12,950 |
Data source: IRS.
Note that all of these tax brackets apply because of tax reform efforts that took place near the end of 2017. Those reform laws had sunset provisions, however, that called for them to end after the 2025 tax year. If nothing happens in the future, then the old brackets with higher income tax rates will automatically apply beginning in 2026.
Get ready for 2020
Tax season for the 2019 tax year will start in January, but it's not too early to do tax planning for the 2020 tax year now. Having these 2020 tax brackets in mind will help you estimate what your tax bill could look like in the coming year.
