Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2019.
Employer retirement plans
- Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $19,000 in compensation in 2019 (up from $18,500 in 2018); employees age 50 and older can defer up to an additional $6,000 in 2019 (the same as in 2018).
- Employees participating in a SIMPLE retirement plan can defer up to $13,000 in 2019 (up from $12,500 in 2018), and employees age 50 and older can defer up to an additional $3,000 in 2019 (the same as in 2018).
IRAs
The combined annual limit on contributions to traditional and Roth IRAs increased to $6,000 in 2019 (up from $5,500 in 2018), with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is phased out for the following modified adjusted gross income (AGI) ranges:
| 2018 | 2019 | |
| Single/head of household (HOH) | $63,000 – $73,000 | $64,000 – $74,000 |
| Married filing jointly (MFJ) | $101,000 – $121,000 | $103,000 – $123,000 |
| Married filing single (MFS) | $0 – $10,000 | $0 – $10,000 |
Note: The 2019 phaseout range is $193,000 – $203,000 (up from $189,000 – $199,000 in 2018) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.
The modified AGI phaseout ranges for individuals to make contributions to a Roth IRA are:
| 2018 | 2019 | |
| Single/HOH | $120,000 – $135,000 | $122,000 – $137,000 |
| MFJ | $189,000 – $199,000 | $193,000 – $203,000 |
| MFS | $0 – $10,000 | $0 – $10,000 |
Estate and gift tax
- The annual gift tax exclusion for 2019 is $15,000, the same as in 2018.
- The gift and estate tax basic exclusion amount for 2019 is $11,400,000, up from $11,180,000 in 2018.
Kiddie tax
Under the kiddie tax rules, unearned income above $2,200 in 2019 (up from $2,100 in 2018) is taxed using the trust and estate income tax brackets. The kiddie tax rules apply to: (1) those under age 18, (2) those age 18 whose earned income doesn’t exceed one-half of their support, and (3) those ages 19 to 23 who are full-time students and whose earned income doesn’t exceed one-half of their support.
Standard deduction
| 2018 | 2019 | |
| Single | $12,000 | $12,200 |
| HOH | $18,000 | $18,350 |
| MFJ | $24,000 | $24,400 |
| MFS | $12,000 | $12,200 |
Note: The additional standard deduction amount for the blind or aged (age 65 or older) in 2019 is $1,650 (up from $1,600 in 2018) for single/HOH or $1,300 (the same as in 2018) for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.
Alternative minimum tax (AMT)
| 2018 | 2019 | |
| Maximum AMT exemption amount | ||
| Single/HOH | $70,300 | $71,700 |
| MFJ | $109,400 | $111,700 |
| MFS | $54,700 | $55,850 |
| Exemption phaseout threshold | ||
| Single/HOH | $500,000 | $510,300 |
| MFJ | $1,000,000 | $1,020,600 |
| MFS | $500,000 | $510,300 |
| 26% rate on AMTI* up to this amount, 28% rate on AMTI above this amount | ||
| MFS | $95,550 | $97,400 |
| All others | $191,100 | $194,800 |
| *Alternative minimum taxable income | ||
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To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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