2020 Tax Update

Tax rates change annually. These are the updates for 2020.

2020 income tax brackets

For unmarried individuals, taxable income over….

$1	10%
$9,875	12%
$40,125	22%
$85,525	24%
$163,300	32%
$207,350	35%
$518,400	37%

For married individuals filing joint returns, taxable income over…

$1	10%
$19,759	12%
$80,250	22%
$171,050	24%
$326,600	32%
$414,700	35%
$622,050	37%

For heads of households, taxable income over…

$1	10%
$14,100	12%
$53,700	22%
$85,500	24%
$163,300	32%
$207,350	35%
$518,400	37%

2020 Long-term capital gains rates

For unmarried individuals, taxable income over…

$1	0%
$40,000	15%
$200,000	18.8%*
$441,450	23.8%*

For married individuals filing joint returns, taxable income over…

$1	0%
$80,000	15%
$250,000	18.8%*
$496,000	23.8%*

For heads of household, taxable income over…

$1	0%
$53,600	%15
$200,000	18.8%*
$469,050	23.8%*

2020 IRA contribution limits

Under age 50	$6,000
Age 50 or over	$7,000

Depending upon whether or not you and your spouse have a retirement plan at work, your IRA contribution may not be tax deductible and a Roth contribution might not be possible. See hereafter.

Traditional IRA contribution income limits

Covered by a plan at work…

Single or Head of Household…	….and your Modified AGI is…	…then you can take…
	$65,000 or less	full deduction
	in between	partial deduction
	$75,000 or more	no deduction
Married filing jointly or qualifying widower…	…and your Modified AGI is…	…then you can take…
	$104,000 or less	partial deduction
	in between	partial deduction
	$124,000 or more	no deduction

Not covered by a plan at work…

Single, Head of Household or Qualifying Widower	Regardless of your income…	…you can take a full deduction
Married with a spouse who does not have a plan at work	Regardless of your income…	…you can take a full deduction
Married with a spouse who does have a plan at work …	…and your Modified AGI is…	…then you can take…
	$196,000 or less	full deduction
	in between	partial deduction
	$206,000 or more	no deduction

Roth IRA contribution income limits

Roth IRA contributions, but not Roth conversions, are limited by income.

2020 income	Single	Married Filing Jointly
May make a full Roth contribution	$124,000 or less	$196,000 or less
Contribution gradually reduced	in between	in between
Not eligible	$137,000 or more	$206,000 or more

SEP and Simple IRA contribution limits

SEP IRAs and Simple IRAs allow larger contributions than IRAs, but as discussed in the book, require rules to be followed.

SEP	$57,000
Simple	$13,500

2020 401k contribution limits

Employee	$19,500
Catch-up over age 50	$6,000
Max including employer	$57,000
Highly-compensated employee, income above	$130,000

2020 estate tax exemption

Unmarried individuals	$11.58 million
Married couples	$23.16 million

Social Security and Medicare Taxes

These are also called FICA taxes, or payroll taxes.

Maximum earnings subject to Social Security Tax (OASDI):	$132,900
OASDI tax rate	12.4%
Max earnings subject to Medicare tax	no cap
Medicare tax rate	2.9%

HSA, HRA and FSA

Health savings accounts, health reimbursement accounts and flexible spending accounts; here are the contribution limits for 2020.

HSA annual contribution individual	$3,550
HSA annual contribution family	$7,100
HSA over age 55 catch-up	$1,000
QSEHRA annual contribution limit individual	$5,250
QSEHRA annual contribution limit family	$10,600
FSA contribution limit	$2,700
Dependent care FSA contribution limit	$5,000