2020 vs 2019 Tax Brackets

by Erik Garcia

With a third of the 2020 tax year behind us, the Internal Revenue Service (IRS) has finally released the 2020 tax brackets. While it might seem a little late in the year, you still have plenty of time to make adjustments to your tax planning strategy.

Before getting to the actual changes within the tax brackets, it’s worth noting that the effective tax rates have not changed. There will still be 7 brackets with the effective tax rates set as follows: 10%, 12%, 22%, 24%, 32%, 35% and 37%. What did change was the wage ranges that are applicable to each bracket.

How Tax Brackets are Defined Each Year

While you might presume setting the annual tax brackets requires a lot of work, the process is actually easy and efficient.

For the most part, the IRS starts with the tax brackets from the prior. They then take those brackets and adjust them upwards based on the current “inflation rate index.” The inflation rate index for 2020 is 1.8%.

2019 Tax Brackets

As a reminder, we wanted to lay out the tax brackets from 2019. They are only applicable to 2019. Since the filing deadline was extended to July 15 due to the Coronavirus pandemic, you might have recently seen these numbers. Here are the 2019 brackets:

Single/Married Filing Separately:

Tax Rate: 10% / Bracket: $0 to $9,700
Tax Rate: 12% / Bracket: $9,701 to $39,475
Tax Rate: 22% / Bracket: $39,476 to $84,200
Tax Rate: 24% / Bracket: $84,201 to $160,725
Tax Rate: 32% / Bracket: $160,726 to $204,100
Tax Rate: 35% / Bracket: $204,101 to $510,300
Tax Rate: 37% / Bracket: Over $510,300

Married Filing Jointly:

Tax Rate: 10% / Bracket: $0 to $19,400
Tax Rate: 12% / Bracket: $19,401 to $78,950
Tax Rate: 22% / Bracket: $78,951 to $168,400
Tax Rate: 24% / Bracket: $168,401 to $321,450
Tax Rate: 32% / Bracket: $160,726 to $204,100
Tax Rate: 35% / Bracket: $408,201 to $612,350
Tax Rate: 37% / Bracket: Over $612,350

Head of Household:

Tax Rate: 10% / Bracket: $0 to $13,850
Tax Rate: 12% / Bracket: $13,851 to $52,850
Tax Rate: 22% / Bracket: $52,851 to $84,200
Tax Rate: 24% / Bracket: $84,201 to $160,700
Tax Rate: 32% / Bracket: $160,701 to $204,100
Tax Rate: 35% / Bracket: $204,101 to $510,300
Tax Rate: 37% / Bracket: over $510,301

2020 Tax Brackets

Here are the new tax brakets for 2020:

Single/Married Filing Separately:

Tax Rate: 10% / Bracket: $0 and $9,875
Tax Rate: 12% / Bracket: $9,875 and $40,125
Tax Rate: 22% / Bracket: $40,125 and $85,525
Tax Rate: 24% / Bracket: $85,525 and $163,300
Tax Rate: 32% / Bracket: $163,300 and $207,350
Tax Rate: 35% / Bracket: $207,350 and $518,400
Tax Rate: 37% / Bracket: Over $518,400

Married Filing Jointly:

Tax Rate: 10% / Bracket: $0 and $19,750
Tax Rate: 12% / Bracket: $19,750 and $80,250
Tax Rate: 22% / Bracket: $80,250 and $171,050
Tax Rate: 24% / Bracket: $171,050 and $326,600
Tax Rate: 32% / Bracket: $326,600 and $414,700
Tax Rate: 35% / Bracket: $414,700 and $622,050
Tax Rate: 37% / Bracket: Over $622,050

Head of Household:

Tax Rate: 10% / Bracket: $0 and $14,100
Tax Rate: 12% / Bracket: $14,100 and $53,700
Tax Rate: 22% / Bracket: $53,700 and $85,500
Tax Rate: 24% / Bracket: $85,500 and $163,300
Tax Rate: 32% / Bracket: $163,300 and $207,350
Tax Rate: 35% / Bracket: $207,350 and $518,400
Tax Rate: 37% / Bracket: over $518,400