Your Guide To 2019 Tax Rates, Brackets, Deductions & Credits

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Young female standing at desk and reviewing 2019 tax rates and numbers

A new tax year means new tax rates, updated income thresholds, and renewed credits and deductions. Here’s a breakdown of the key tax elements affecting your 2019 tax return which you file in 2020.

If you need to make adjustments, make them earlier in the year for the greatest impact.

 

Federal tax brackets & rates for 2019

At the federal level, there are seven tax brackets that range from 10% to 37%. Each rate applies to its own tax bracket and is based on your filing status.

You have four filing statuses to choose from – single, married filing jointly, married filing separately, or head of household.

The federal tax brackets are progressive. If you’re a single filer and your taxable income is $55,000, $9,700 is taxed at 10%. Then, income between $9,701 and $39,475 is taxed at 12%, and the remaining amount between $39,476 and $55,000 is taxed at 22%.

Below are the tax rates for 2019 and 2018 so you can see how your income might be taxed differently this year.

Single taxpayers

Tax Rate2019 Taxable Income Brackets2018 Taxable Income Brackets
10%$0 - $9,700$0 - $9,525
12%$9,701 - $39,475$9,526 - $38,700
22%$39,476 - $84,200$38,701 - $82,500
24%$84,201 - $160,725$82,501 - $157,500
32%$160,726 - $204,100$157,501 - $200,000
35%$204,101 - $510,300$200,001 - $500,000
37%$510,301 +$500,001 +

Married filing jointly taxpayers

Tax Rate2019 Taxable Income Brackets2018 Taxable Income Brackets
10%$0 - $19,400$0 - $19,050
12%$19,401 - $78,950$19,051 - $77,400
22%$78,951 - $168,400$77,401 - $165,000
24%$168,401 - $321,450$165,001 - $315,000
32%$321,451 - $408,200$315,001 - $400,000
35%$408,201 - $612,350$400,001 - $600,000
37%$612,351 +$600,001 +

Married filing separately taxpayers

Tax Rate2019 Taxable Income Brackets2018 Taxable Income Brackets
10%$0 - $9,700$0 - $9,525
12%$9,701 - $39,475$9,526 - $38,700
22%$39,476 - $84,200$38,701 - $82,500
24%$84,201 - $160,725$82,501 - $157,500
32%$160,726 - $204,100$157,501 - $200,000
35%$204,101 - $306,175$200,001 - $300,000
37%$306,176 +$300,001 +

Head of household taxpayers

Tax Rate2019 Taxable Income Brackets2018 Taxable Income Brackets
10%$0 - $13,850$0 - $13,600
12%$13,851 - $52,850$13,601 - $51,800
22%$52,851 - $84,200$51,801 - $82,500
24%$84,201 - $160,700$82,501 - $157,500
32%$160,701 - $204,100$157,501 - $200,000
35%$204,101 - $510,300$200,001 - $500,000
37%$510,301 +$500,001 +

Michigan tax rate for 2019

In Michigan, there is just one tax rate that applies to all taxpayers, no matter your income or filing status. Michigan’s flat tax rate is 4.25%.

Simple compared to the federal system, right?

Deductions & limits for 2019

When you claim a deduction, you subtract the deduction amount from your adjusted gross income (AGI). This reduces your taxable income. Lower income = lower tax bill.

Here are some key deductions that you might be able to claim in 2019.

 

Standard deduction

You can take the standard deduction on your tax return or choose to itemize (list out) each of your deductions. Taking the standard deduction is the simplest option.

But, if you add up all your deductions and find that they’re greater than the standard deduction, it’s better to itemize.

Filing status2019 Standard Deduction Amount2018 Standard Deduction Amount
Single$12,200$12,000
Married filing jointly & surviving spouse$24,400$24,000
Married filing separately$12,200$12,000
Head of household$18,350$18,000

Medical & dental expenses

Once your medical and dental expenses exceed 10% of your AGI, you can deduct them on your tax return if you itemize. This rate increased from 7.5% from 2018.

 

State & local taxes

You can deduct up to $10,000 in state and local sales, income, and property taxes unless your filing status is married filing separately. In that case, you’re limited to a $5,000 deduction.

If you live in a high-tax state like California or Hawaii, this deduction might not be as helpful as in past years.

 

Home mortgage interest

If you take out a mortgage to buy, build, or renovate to improve your home, you can deduct the interest you pay on the mortgage.

This deduction is limited to mortgage debt – or home acquisition debt – up to $750,000. If your status is married filing separately, it’s limited to debt up to $375,000.

If your mortgage was created before the Tax Cuts and Jobs Act passed in 2017, it’s grandfathered in. Old deduction rules apply. In that case, you can deduct interest up to $1 million of mortgage debt plus an additional $100,000 of equity debt.

You have to itemize to claim this deduction, which may seem obvious because these amounts could be far greater than the standard deduction.

 

Charitable donations

Do you donate to public organizations? If so, you can deduct cash donations up to 60% of your AGI if you itemize.

If you’re a big giver, stick with it and you’ll be rewarded. Make sure your donations count as a charitable donation though.

 

QBI deduction

This deduction is still fairly new and applies to taxpayers who receive qualified business income (QBI) from a pass-through entity. If that’s you, you can deduct 20% of the QBI you receive.

This deduction is pretty complex, so make sure you know how it applies to you and whether your deduction is limited.

 

Student loan interest

If you pay interest on student loans in 2019, you can deduct up to $2,500 of it on your 2019 tax return. Phaseouts do apply and are based on your modified AGI.

 

Credits & limits for 2019

Deductions reduce your taxable income, but tax credits directly reduce your tax bill – dollar for dollar. Some tax credits are refundable. In the case that your refundable tax credit is more than your tax bill, you get a check for the difference.

If it’s nonrefundable, it’ll just reduce your tax bill to $0. Therefore, it’s important to know which ones you qualify for and how to claim them.

You wouldn’t want to pay more taxes if you don’t have to, right?

 

Child tax credit

If you have children, you can deduct up to $2,000 per qualifying child. This credit is refundable up to $1,400.

If you have other qualifying dependents, you can claim a $500 credit for each dependent who isn’t your child. This credit is subject to phaseouts starting at $400,000 for married filing jointly taxpayers or $200,000 for other taxpayers.

The Tax Cuts and Jobs Act expanded this credit in 2018 so more taxpayers should be able to claim and benefit from it.

 

Adoption credit

If you adopt a child, you can claim a credit up to $13,810. The credit increases to $14,080 if you adopt a child with special needs.

Qualified expenses – adoption fees, attorney and court costs, travel expenses, and other expenses related to adopting a child are eligible for this credit.

 

Child & dependent care credit

This credit is calculated as a percentage of the costs you pay for child and dependent care costs.

You can claim 20% to 35% of your care costs up to $3,000 if you pay for one person to receive care, or up to $6,000 if you have two or more people receiving care.

The percentage you can claim is based on your income. This credit has many rules on who qualifies as a dependent, the care they receive, so we recommend looking into this further to make sure you’re eligible to claim it.

 

Saver’s credit

Do you contribute to a traditional Roth IRA, 401(k), Simple IRA, Sarsep, 403(b), 457(b), or an ABLE account? If so, you might be able to claim the saver’s credit up to $2,000.

You’re eligible for this credit if your AGI is less than $64,000 (married filing jointly), $48,000 (head of household), or $32,000 (other filing statuses).

Here’s how it works. You can claim 50%, 20% or 10% of the amount you contribute – up to $2,000. If you file as married filing jointly, you can contribute up to $4,000 and get a credit for a percentage of it.

 

American Opportunity Tax Credit

You can take the AOTC credit for tuition, required fees, and course materials you pay in the first four years of higher education. You can claim up to $2,000, then 25% of the next $2,000 you pay.

Therefore, the maximum amount you can claim is $2,500 per eligible student. Income limits do apply to this credit.

 

Lifetime Learning Credit

You can claim this credit for qualified tuition and related expenses you pay for students enrolled in an educational institution. It can apply to undergraduate, graduate, and professional degree courses which is more flexible than the AOTC.

The maximum amount you can claim is $2,000 – 20% of the first $10,000 you pay for education expenses. If you pay less than $10,000, you claim 20% of that amount. Income limits also apply to this credit.

 

It’s key to plan ahead to influence your tax bill. Which of these credits or deductions could you qualify for?

Should you do anything differently in 2019 to try and reduce your tax bill? Save more for retirement? Pay more or less in child care? Pay off more student loan interest?

If you change your filing status, how does it impact everything else? Knowing which credits or deductions apply to you is great. But, what more can you do to increase their impact so you have a lower tax bill when you file your 2019 return?

 

Have questions about 2019 tax rates, credits, or deductions? Let’s talk!