Choose how you want to be taxed with advanced financial plans
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%*
*Includes 3.8% net investment income tax
For married individuals filing joint returns, taxable income over…
$1
0%
$80,000
15%
$250,000
18.8%*
$496,000
23.8%*
*Includes 3.8% net investment income tax
For heads of household, taxable income over…
$1
0%
$53,600
%15
$200,000
18.8%*
$469,050
23.8%*
*Includes 3.8% net investment income tax
2020 IRA contribution limits
Under age 50
$6,000
Age 50 or over
$7,000
Traditional and Roth IRA contribution limits
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
Covered by a retirement plan at work
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
If you don’t have a retirement plan at work
Roth IRA contribution income limits
Roth IRA contributions, but not Roth conversions, are limited by income.
2020income
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
Maximum income for Roth contributions
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
Employee over age 50
$26,000
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):
$137,700
OASDI tax rate
12.4%
Max earnings subject to Medicare tax
no cap
Medicare tax rate
2.9%
Self-employed people pay all of it. Or, for employees, they pay half, employers pay half.
HSA, HRA and FSA
Health savings accounts, health reimbursement accounts and flexible spending accounts; here are the contribution limits for 2020.