2019 IRS Inflation Adjustments

Several of the IRS annual limits are set to increase in 2019 with cost-of-living adjustments. Earlier this month, the IRS released Revenue Procedure 2018-57, which details all of the changes and adjustments for 2019. We’ve summarized a few of the ones we feel will have the broadest impact here:

STANDARD DEDUCTION
	2018	2019	Change
Married Filing Jointly	$24,000	$24,400	$400
Single and Married Filing Separately	$12,000	$12,200	$200
Head of Household	$18,000	$18,350	$350

CONTRIBUTION LIMITS¹
	2018	2019	Change
Traditional and Roth IRA	$5,500	$6,000	$500
IRA Catch-up Limit²	$1,000	$1,000	No change
Elective Deferral Plans³	$18,500	$19,000	$500
Elective Deferral Plan Catch-up Limit²	$6,000	$6,000	No change

¹ Check with your advisor for the limits applicable to SEP, SIMPLE, and defined contribution plans.
² Catch-up contributions are available for anyone over age 50
³ Elective deferral plans include 401(k) plans, 403(b) plans, most 457 plans, and Thrift Savings plans

AGI PHASE-OUTS
Roth IRA Contribution	2018	2019	Change
Single/Head of Household	$120,000-$135,000	$122,000-$137,000	$2,000
Married Filing Joint	$189,000-$199,000	$193,000-$203,000	$4,000

AGI PHASE-OUTS
Deductible IRA Contribution	2018	2019	Change
Single/Head of Household	$63,000-$73,000	$64,000-$74,000	$1,000
Married Filing Separate	$0-$10,000	$0-$10,000	No change
Married Filing Joint (active spouse)	$101,000-$121,000	$103,000-$123,000	$2,000
Married Filing Joint (non-active spouse)	$189,000-$199,000	$193,000-$203,000	$4,000

ESTATE & GIFT TAX
	2018	2019	Change
Annual Exclusion Gifts	$15,000	$15,000	No change
Estate and Gift Tax Basic Exclusion	$11,180,000	$11,400,000	$220,000
Generation Skipping Exemption	$11,180,000	$11,400,000	$220,000

OTHER ADJUSTMENTS
	2018	2019	Change
Long Term Capital Gains Rate brackets (married filing jointly)	0% – up to $77,200 15% – up to $479,000 20% – over $479,000	0% – up to $78,750 15% – up to $488,850 20% – over $488,850	0% – $1,550 15% – $9,850 20% – $9,850
Unearned Income Subject to Kiddie Tax	$1,050	$1,100	$50
HSA contribution limit	$3,450 (self only) $6,900 (family)	$3,500 (self only) $7,000 (family)	$50 (self only) $100 (family)
Cafeteria plans (e.g. Flexible Spending Accounts) maximum contributions	$2,650	$2,700	$50
Adoption Credit for Qualified Expenses (phased out based on MAGI)	$13,810	$14,080	$270
Foreign Earned Income Exclusion	$103,900	$105,900	$2,000
Lifetime Learning Credit AGI Threshold	$114,000	$116,000	$2,000
Limitation on Itemized Deductions	None	None	No change

INCOME TAX BRACKETS
MARRIED FILING JOINTLY
	2018	2019
37%	Income over $600,000	Income over $612,350
35%	$400,001 to $600,000	$408,201 to $612,349
32%	$315,001 to $400,000	$321,451 to $408,200
24%	$165,001 to $315,000	$168,401 to $321,450
22%	$77,401 to $165,000	$78,951 to $168,400
12%	$19,051 to $77,400	$19,401 to $78,950
10%	Income up to $19,050	Income up to $19,400

INCOME TAX BRACKETS
SINGLE TAXPAYERS
	2018	2019
37%	Income over $500,000	Income over $510,300
35%	$200,000 to $499,999	$204,100 to $510,299
32%	$157,500 to $199,999	$160,725 to $204,099
24%	$82,500 to $157,499	$84,200 to $160,724
22%	$38,700 to $82,499	$39,475 to $84,199
12%	$9,525 to $38,699	$9,700 to $39,474
10%	Income up to $9,524	Income up to $9,699

There are many other cost-of-living adjustments for 2019 which may impact you. Review the Revenue Procedure 2018-57 and consult your CPA to see if there are others you need to be aware of for your specific situation.

For additional reading:
With the 2018 Tax Cuts and Jobs Act, several cost-of-living adjustments will now be based on a different calculation of inflation (Chained CPI instead of CPI-U) which will mean slower growth (and higher taxes) over time. For more information on the Chained CPI calculation check out our article from April 2018.

This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.