IRS Changes for 2020
New changes in tax and retirement law will allow Americans to save more money for retirement.
The Secure Act, which became effective this year, will help taxpayers use their tax savings to invest in their future retirement.
The IRS raised the cap on 401(k) contributions $500 to $19,500. People 50 and older can contribute an additional $6500 as part of their catch-up contributions. That’s $500 more than last year.
One incentive to save is that traditional pre-tax contributions to a 401(k) can reduce your adjusted gross income or taxable income, to put away for the maximum benefit.
The IRS released its inflation-adjusted personal tax brackets for 2020 at the end of last year. This Tax Foundation chart helps you determine your federal tax bracket based on the income you will earn in 2020.
For 2020, the IRS has increased the standard deduction by $400 for married couples filing jointly to $24,800. The standard deduction for single taxpayers increased $200 and rose to $12,400. For heads of households, the standard deduction will be $18,650 for tax year 2020, up $300.
Tax Refunds in 2019
The average refund check in 2019 for individuals was $2,860, slightly down from the average $2,899 refund in 2018 because it was the first time people filed under the new tax reform guidelines. and the new tax laws were primarily geared towards corporations.