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Six key changes under the tax reform plan
The tax reform changes went into effect on Jan. 1, 2020. But, most of those changes don't impact 2019 tax returns.
Standard Deduction Increases
No matter your filing status, the standard deduction increases 2020.
- Single and Married Filing Separately: $12,000
- Married Filing Jointly: $24,000
- Head of Household: $18,000
Personal Exemption Eliminated
Under the tax reform, taxpayers can no longer claim the $4,050 personal exemption for each of their dependents.
Child Tax Credit Rises
The Child Tax Credit increases in value from $1,000 to $2,000. The tax reform bill also introduces a new $500 credit for non-child dependents.
State and Local Capped
Taxpayers can deduct up to $10,000 in state and local income taxes. Previously there was no cap.
ACA Individual Mandate Repealed
Beginning in 2019, individuals who choose to go without healthcare coverage for the year will not have to pay tax penalties.
Mortgage Interest Deduction Drops
Individuals who purchase a home in 2020 can only deduct interest up to $750,000 in mortgage debt (previously $1 million). The interest deduction on home-equity loans is eliminated.
Estimate your 2020 taxes
Tax reform impacts most taxpayers. Learn how the changes could affect your 2020 tax return.
Calculate Now2020 Income Tax Brackets
The tax reform bill keeps the same seven tax bracket structure, but most taxpayers will see lower tax rates.
The income thresholds were also adjusted.
| Tax Rate | Individual | Married Filing Separate | Head of Household | Married Filing Joint |
|---|---|---|---|---|
| 10% | $0 - $9,525 | $0 - $9,525 | $0 - $13,600 | $0 - $19,050 |
| 12% | $9,526 - $38,700 | $9,526 - $38,700 | $13,601 - $51,800 | $19,051 - $77,400 |
| 22% | $38,701 - $82,500 | $38,701 - $82,500 | $51,801 - $82,500 | $77,401 - $165,000 |
| 24% | $82,501 - $157,500 | $82,501 - $157,500 | $82,501 - $157,500 | $165,001 - $315,000 |
| 32% | $157,501 - $200,000 | $157,501 - $200,000 | $157,501 - $200,000 | $315,001 - $400,000 |
| 35% | $200,001 - $500,000 | $200,001 - $300,000 | $200,001 - $500,000 | $400,001 - $600,000 |
| 37% | over $500,000 | over $300,000 | over $500,000 | over $600,000 |
Remember to not simply multiply all of your income by the top rate. Learn how income tax brackets work.