The IRS today released an advance version of Rev. Proc. 2018-57 providing the annual inflation adjustments for more than 60 tax provisions to be used by individual taxpayers on their 2019 returns (and generally filed in 2020).
Rev. Proc. 2018-57 [PDF 123 KB] provides the tax rate schedules and other tax amounts as adjusted for inflation, and reflects changes enacted by the new tax law in the United States (Pub. L. No. 115-97, enacted December 22, 2017).
The new law introduced a new method for indexing the tax rate thresholds, standard deduction amounts, and other amounts for inflation. Previously, the annual inflation adjustments were made by reference to the consumer price index (CPI). The new tax law, however, uses “chained CPI” which takes into account consumers’ preference for cheaper substitute goods during periods of inflation.
Chained CPI will generally result in smaller annual increase to indexed amounts. The change to chained CPI for inflation indexing is effective for tax years beginning after 2017.
With the inflation adjustment, Rev. Proc. 2018-57 provides that for tax year 2019:
The standard deduction amounts for 2019 increase, as follows:
The personal exemption for tax year 2019 remains at $0 (the personal exemption was suspended for tax years 2018 through 2025 by the new U.S. tax law).
For 2019, there is no limitation on overall itemized deductions (referred to as the “Pease” limitation under prior law) because that limitation was suspended by the new tax law for years 2018-2015.
*For 2018, the AMT exemption amount was $70,300 and began to phase out at $500,000 ($109,400 for married couples filing jointly and began to phase out at $1 million).
Read a related IRS release—IR-2018-222
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