With tax season in full swing, it’s time to familiarize yourself with key changes taking effect this year in order to maximize your return. While you can always consult financial advisors to determine how recent changes in tax laws will affect your finances, it’s helpful to understand in advance how your tax return will be different in 2020. Here’s what to expect from the modified income and estate tax regulations. 

What Are the New Changes to the Income Tax Law?

To reduce federal taxes for taxpayers, the IRS has made some inflation adjustments in 2020. The following are some examples of changes that will apply to tax brackets, deductions, health benefits, and retirement plans.

• Single filers at the top tax rate of 37% now have a taxable income of $518,400 and up.

• Married filing jointly (MFJ) at the top tax rate of 37% will have a taxable income of $622,050 and up.

• Married filing separately (MFS) at the top tax rate of 37% now have a taxable income of $311,025 and up.

• The standard deduction this year is $12,400 for singles and MFS, and $24,800 for MFJ.

• The standard deduction for heads of households is now $18,650

• The employee contribution limit has been raised to $19,500 when it comes to most 457 plans, including 410(k) and 403(b).

• For individuals 50 and older, the catch-up contribution limit is now $6,500.

• Those with self-only coverage under a health savings account can save up to $3,550 in the form of an annual deductible.

• Family plan account holders are now allowed to have an annual deductible of not more than $7,100.

Overall, these changes are relatively minor compared with those in past years. You’re also likely to save money with some of the implemented adjustments. Qualified financial advisors should be able to explain in more detail how your income tax has changed.

How Will Estate Tax Change in 2020?

You will now be exempted from paying federal estate and gift tax as long as your taxable estate or gift doesn’t exceed $11.58 million—a minor increase from last year’s $11.4 million. Nevertheless, this means married couples can transfer assets worth up to $23.16 million without having to pay estate or gift tax. Financial advisors suggest that taxpayers update their estate plans soon if they want to take advantage of the increased exemption amount. 

Work with expert financial advisors if you want to enjoy the benefits of tax planning. Seeman Holtz in Boca Raton, FL, offers top-notch advice and solutions when it comes to insurance, risk management, payroll, employee benefits, legacy planning, and more. Call them today at (800) 991-3592 to speak with a knowledgeable representative or visit their website to request a quote online.