2020 Tax Law Changes

1. Higher Standard Deductions

In 2020, the standard deduction has risen once again. It now stands at $12,400 for single tax filers, $24,800 for married couples filing jointly, and $18,650 for heads of household.

2. Higher 401(k) Contribution Limits

The current annual 401(k) limits are $19,500 for workers under 50 and $26,000 for those 50 or older. This represents a $500 jump for younger workers compared with 2019, and a $1,000 boost for those 50 or older.

3. Higher HSA Limits

In 2020, you can contribute up to $3,550 to an HSA if you have individual health coverage. For family health coverage, that limit doubles to $7,100. And if you're 55 or older, you get a $1,000 catch-up, similar to the catch-up you get in an IRA.

4. Higher Income Limits for Roth IRAs

The income thresholds at which contributions phase out have increased from 2019.

Currently, contributions don't begin to phase out for single tax filers until their income reaches $124,000, and contributions are only barred completely for incomes of $139,000 and over. Married couples, meanwhile, can earn up to $196,000 before contributions start to phase out, and they're only barred completely past $206,000 of joint income.

If you have any questions about the above law changes, or would like to learn more, please contact me to set up a free consultation