2020 Tax Rates

Table 1. 2020 Federal Income Tax Brackets and Rates for Single Filers, Married Couples Filing Jointly, and Heads of Households

Rate For Single Individuals For Married Individuals Filing Joint Returns For Heads of Households
10% $0 to $9,875 $0 to $19,750 $0 to $14,100
12% $9,876 to $40,125 $19,751 to $80,250 $14,101 to $53,700
22% $40,126 to $85,525 $80,251 to $171,050 $53,701 to $85,500
24% $85,526 to $163,300 $171,051 to $326,600 $85,501 to $163,300
32% $163,301 to $207,350 $326,601 to $414,700 $163,301 to $207,350
35% $207,351 to $518,400 $414,701 to $622,050 $207,351 to $518,400
37% $518,401 or more $622,051 or more $518,401 or more

Standard Deduction and Personal Exemption

The standard deduction for single filers will increase by $200, and by $400 for married couples filing jointly (Table 2).

The personal exemption for 2020 remains eliminated.

Table 2. 2020 Standard Deduction

Filing Status Deduction Amount
Single $12,400
Married Filing Jointly $24,800
Head of Household $18,650

Alternative Minimum Tax

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two.

The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subjected to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent.

The AMT exemption amount for 2020 is $72,900 for singles and $113,400 for married couples filing jointly (Table 3).

Table 3. 2020 Alternative Minimum Tax Exemptions

Filing Status Exemption Amount
Single Individuals $72,900
Married Filing Jointly $113,400

In 2020, the 28 percent AMT rate applies to excess AMTI of $197,900 for all taxpayers ($98,950 for married couples filing separate returns).

AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2020, the exemption will start phasing out at $518,400 in AMTI for single filers and $1,036,800 for married taxpayers filing jointly (Table 4).

Table 4. 2020 Alternative Minimum Tax Exemption Phaseout Thresholds

Filing Status Threshold
Single Individuals $518,400
Married Filing Jointly $1,036,800

Earned Income Tax Credit

The maximum Earned Income Tax Credit in 2020 for single and joint filers is $538, if there are no children (Table 5). The maximum credit is $3,584 for one child, $5,920 for two children, and $6,660 for three or more children. All these are relatively small increases from 2019.

Table 5. 2020 Earned Income Tax Credit Parameters

Filing Status No Children One Child Two Children Three or More Children
Single or Head of Household Income at Max Credit $7,030 $10,540 $14,800 $14,800
Maximum Credit $538 $3,584 $5,920 $6,660
Phaseout Begins $8,790 $19,330 $19,330 $19,330
Phaseout Ends (Credit Equals Zero) $15,820 $41,756 $47,440 $50,954
Married Filing Jointly Income at Max Credit $7,030 $10,540 $14,800 $14,800
Maximum Credit $538 $3,584 $5,920 $6,660
Phaseout Begins $14,680 $25,220 $25,220 $25,220
Phaseout Ends (Credit Equals Zero) $21,710 $47,646 $53,330 $56,844

Child Tax Credit

The child tax credit totals at $2,000 per qualifying child and is not adjusted for inflation. However, the refundable portion of the Child Tax Credit is adjusted for inflation but will remain at $1,400 for 2020.

Capital Gains

Long-term capital gains are taxed using different brackets and rates than ordinary income.

2020 Tax Rates on Long Term Capital Gains

For Unmarried Individuals For Married Individuals Filing Joint Returns For Heads of Households
Taxable Income Over
0% $0 $0 $0
15% $40,000 $80,000 $53,600
20% $441,450 $496,600 $469,050
Additional Net Investment Income Tax
3.8% MAGI above $200,000 MAGI above $250,000 MAGI above $200,000

Qualified Business Income Deduction (Sec. 199A)

The Tax Cuts and Jobs Act includes a 20 percent deduction for pass-through businesses against up to $163,300 of qualified business income for single taxpayers and $326,600 for married taxpayers filing jointly (Table 7).

Table 7. 2020 Qualified Business Income Deduction Thresholds

Filing Status Threshold
Single Individuals $163,300
Married Filing Jointly $326,600

Annual Exclusion for Gifts

In 2020, the first $15,000 of gifts to any person is excluded from tax. The exclusion is increased to $157,000 for gifts to spouses who are not citizens of the United States.

Source: Internal Revenue Service