The Internal Revenue Service adjusted several tax provisions for 2019, including some that could impact how you file and choose to save for retirement.
Here are the facts you should know before you file your 2019 taxes.
1. Taxable income bracket amounts have increased
The income limits for each tax bracket have increased for 2019. The tax rates are unchanged from 2018 and range from 10% to 37%, depending on your taxable income and filing status.
The tax brackets for 2019 are:
2. The standard deduction increased
Depending on your situation, you may choose to take the standard deduction over the option to itemize. The standard deductions for 2019 are:
Source: Internal Revenue Service
3. Retirement account contribution limits have increased
Contribution limitations on common retirement plan accounts have increased modestly for 2019, including:
401(k), 403(b) and most 457 plans
- Taxpayers younger than age 50 can contribute up to $19,000 to their workplace retirement account in 2019, an increase from $18,500 in 2018.
- The additional catch-up contribution for those who are age 50 or older is unchanged at $6,000.
Individual retirement accounts (IRA)
- Contribution limits to IRAs increased to $6,000, up from the $5,500 limit in 2018.
- The catch-up contribution remains the same at $1,000.
SIMPLE IRA plans
- Those with SIMPLE IRA plans can contribute up to $13,000 for 2019, up from $12,500 in 2018.
- Catch-up contributions are unchanged at $3,000 for those age 50 and older.
4. Some itemized deductions and credits have changed
The following common deductions and credits have changed:
- Medical and dental expenses must exceed 10% of your adjusted gross income to be deductible, up from 7.5% in 2018.
- Adoption credit for qualified expenses is $14,080, up from $13,810 in 2018.
Talk with your advisor about year-end planning
Your financial advisor can collaborate with your tax advisor to factor taxes into your financial picture. If you are looking to work with a tax or legal professional, your advisor may be able to refer you to one.