Key Retirement and Tax Numbers for 2020
By Mark FisselPosted on December 31st, 2019
Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2020.
Employer retirement plans
- Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $19,500 in compensation in 2020 (up from $19,000 in 2019); employees age 50 and older can defer up to an additional $6,500 in 2020 (up from $6,000 in 2019).
- Employees participating in a SIMPLE retirement plan can defer up to $13,500 in 2020 (up from $13,000 in 2019), and employees age 50 and older can defer up to an additional $3,000 in 2020 (the same as in 2019).
IRAs
The combined annual limit on contributions to traditional and Roth IRAs is $6,000 in 2020 (the same as in 2019), with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA phases out for the following modified adjusted gross income (MAGI) ranges:
| 2019 | 2020 | |
|---|---|---|
| Single/head of household (HOH) | $64,000 – $74,000 | $65,000 – $75,000 |
| Married filing jointly (MFJ) | $103,000 – $123,000 | $104,000 – $124,000 |
| Married filing separately (MFS) | $0 – $10,000 | $0 – $10,000 |
The 2020 phaseout range is $196,000 – $206,000 (up from $193,000 – $203,000 in 2019) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.
The modified adjusted gross income phaseout ranges for individuals to make contributions to a Roth IRA are:
| 2019 | 2020 | |
|---|---|---|
| Single/HOH | $122,000 – $137,000 | $124,000 – $139,000 |
| MFJ | $193,000 – $203,000 | $196,000 – $206,000 |
| MFS | $0 – $10,000 | $0 – $10,000 |
Estate and gift tax
- The annual gift tax exclusion for 2020 is $15,000, the same as in 2019.
- The gift and estate tax basic exclusion amount for 2020 is $11,580,000, up from $11,400,000 in 2019.
Kiddie tax
Under the kiddie tax rules, unearned income above $2,200 in 2020 (the same as in 2019) is taxed using the trust and estate income tax brackets. The kiddie tax rules apply to: (1) those under age 18, (2) those age 18 whose earned income doesn’t exceed one-half of their support, and (3) those ages 19 to 23 who are full-time students and whose earned income doesn’t exceed one-half of their support.
Standard deduction
| 2019 | 2020 | |
|---|---|---|
| Single | $12,200 | $12,400 |
| HOH | $18,350 | $18,650 |
| MFJ | $24,400 | $24,800 |
| MFS | $12,200 | $12,400 |
The additional standard deduction amount for the blind or aged (age 65 or older) in 2020 is $1,650 (the same as in 2019) for single/HOH or $1,300 (the same as in 2019) for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.
Alternative minimum tax (AMT)
| 2019 | 2020 | |
|---|---|---|
| Maximum AMT exemption amount | ||
| Single/HOH | $71,700 | $72,900 |
| MFJ | $111,700 | $113,400 |
| MFS | $55,850 | $56,700 |
| Exemption phaseout threshold | ||
| Single/HOH | $510,300 | $518,400 |
| MFJ | $1,020,600 | $1,036,800 |
| MFS | $510,300 | $518,400 |
| 26% rate on AMTI* up to this amount, 28% rate on AMTI above this amount | ||
| MFS | $97,400 | $98,950 |
| All others | $194,800 | $197,900 |
| *Alternative minimum taxable income |
Source: Broadridge