01/03/2020
Do You Know Your Tax Bracket?
Although the Tax Cuts and Jobs Act (TCJA) generally reduced
individual tax rates through 2025, there’s no guarantee you’ll receive a refund or lower tax
bill. Some taxpayers have actually seen their taxes go up because of reductions or eliminations
of certain tax breaks. For this reason, it’s important to know your bracket.
Some single and
head of household filers could be pushed into higher tax brackets more quickly than was
the case pre-TCJA. For example, the beginning of the 32% bracket for singles for 2019
is $160,725, whereas it was $191,651 for 2017 (though the rate was 33% then). For
heads of households, the beginning of this bracket has decreased even more significantly, to $160,700
for 2019 from $212,501 for 2017.
Married taxpayers, on the other hand, won’t be pushed into
some middle brackets until much higher income levels through 2025. For example, the beginning of
the 32% bracket for joint filers for 2019 is $321,450, whereas it was $233,351 for
2017. (Again, the rate was 33% then.)
As before the TCJA, the tax brackets are adjusted
annually for inflation. Because there are so many variables under the law, it’s hard to
say exactly how a specific taxpayer’s bracket might change from year to year. Contact us
for help assessing what your tax rate likely will be for 2020 — and for
help filing your 2019 tax return.
