Projected 2019 Tax Rates, Brackets, Standard Deduction Amounts And More

Projected 2019 Tax Rates, Brackets, Standard Deduction Amounts And More

The U.S. Bureau of Labor Statistics reported today that the consumer price index (CPI) has increased by .2% for August, the same as in July. The CPI measures the cost of goods and services – in other words, your cost of living. When the CPI doesn’t change much, it tends to signal that interest rates will stay put. This is important information for taxpayers because the Tax Code provides for mandatory annual adjustments to certain tax items based on inflation.


That said, there’s a change in the way that the Internal Revenue Service (IRS) will figure cost-of-living adjustments for 2019. As part of the Tax Cuts And Jobs Act, the “normal” CPI has been replaced with a “chained” CPI. The chained CPI measures consumer responses to higher prices rather than simply measuring the higher prices. What that means for taxpayers is that inflation adjustments will appear smaller.

(You can find some examples of how the chained CPI works here.)

Inflation and cost-of-living adjustments are routinely included in tax legislation – that’s why you’ll see changes from year to year in everything from standard deduction amounts to federal gift tax exemptions. To help you with your tax planning, Bloomberg Tax released a first look at predicted rates for 2019.

“While the IRS won’t announce actual inflation adjustments for next year for some time, our projections help taxpayers and tax planners get a jumpstart on the 2019 tax planning season by allowing them to more accurately estimate their tax liabilities for the upcoming year,” said George Farrah, Bloomberg Tax Editorial Director. “This process is especially important for 2019 because most of the changes under the 2017 tax act will be in effect. Taxpayers and their advisors should pay close attention to the impact of inflation adjustments determined using the chained CPI index on income tax bracket thresholds and other tax amounts.”

Follows are some of the projected numbers for the tax year 2019, beginning January 1, 2019. These are not the tax rates and other numbers for 2018 (you’ll find the official 2018 tax rates here).

Tax Brackets

Because a higher CPI pushes the brackets upward and increases the standard deduction and exemption amounts, the taxes due on the same income will decrease – albeit slightly. Here are what the rates are expected to look like:

Capital Gains

Capital gains rates will not change for 2019. However, the break points for the rates will change. Bloomberg Tax anticipates that the maximum zero rate amounts and maximum 15% rate amounts will break down as follows……Read More>>>



Source:- forbes


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