Tax Updates for 2020

As we approach the holiday season, it looks like enough of us have made the Nice List for the IRS to leave us some small gifts in our stockings for 2020. There has been no major tax legislation affecting individuals this year so most of these changes were previously planned for or indexed in for inflation. Remember, these are changes for the 2020 Tax Year, so they will affect filings for the tax season of 2021.

	2019	2020
Standard Deduction – Married Filing Joint	$24,400	$24,800
Standard Deduction – Single	$12,200	$12,400
Standard Deduction – Head of Household	$18,350	$18,650
Health Savings Account Contribution – Family	$  7,000	$  7,100
401(k) Plan Contribution Limits	$19,000	$19,500
401(k) Plan “Catch Up” Contribution – Over 50	$  6,000	$  6,500

 

So, the total amount that you can defer into your 401(k) increased from $25,000 to $26,000 if you’re over the age of 50.

Several exclusions and limits remain unchanged for 2020 from 2019. The Annual Gift Exclusion stays at $15,000. The IRA Contribution Limit stays at $6,000 and the IRA “Catch Up” Contribution, if over the age of 50, stays at $1,000. The “catch-up” contribution to health savings accounts for those over 55 remains unchanged at $1,000.