On Wednesday the Internal Revenue Service announced tax year 2020 annual inflation adjustments.  Impacts are negligible as if often the case.

A detailed description of all adjustments is available in Revenue Procedure 2019-44.  Those impacting the majority of taxpayers include:

  • The standard deduction for taxpayers filing MFJ increases from $24,400 (tax year 2019) to $24,800.  Single and MFS filers get a deduction of $12,400 (up from $12,200 in tax year 2019).  HOH filers get a deduction of $18,650 (up from $18,350 in tax year 2019).
  • The AMT exemption for MFJ filers increases from $111,700 (tax year 2019) to $113,400.  The phase out threshold increases from $1,020,600 (tax year 2019) to $1,036,800.  Single filers get an AMT exemption of $72,900 (up from $71,700 in tax year 2019) and start to phase out at $518,400 (up from $510,300 in tax year 2019).
  • The qualified transportation/parking fringe benefit limit increases from $265/mo (tax year 2019) to $270/mo.
  • Contributions to FSAs (health flex savings accounts) will max out at $2,750 (up from $2,700 in tax year 2019).
  • The annual gift exclusion is unchanged at $15,000/yr.
  • Estates of decedents receive an increased basic exclusion of $11,580,000 (up from $11,400,000 for tax year 2019).