As you build your 2019 business plans, keep in mind the following inflation-adjusted figures that help to put planning strategies in context.
FEDERAL INCOME TAX & TAXABLE EQUIVALENT YIELD
| Tax-free Yield | ||||||
| Filing Status | Federal Taxable Income | Federal Income Tax Bracket | 1.50% | 2.00% | 2.50% | 3.00% |
| Taxable Equivalent Yield | ||||||
| Married Filing Jointly | $0 – 19,400 | 10.00% | 1.67% | 2.22% | 2.78% | 3.33% |
| $19,401 – 78,950 | 12.00% | 1.70% | 2.27% | 2.85% | 3.41% | |
| $78,951 – 168,400 | 22.00% | 1.92% | 2.56% | 3.21% | 3.85% | |
| $168,401 – 321,450 | 24.00% | 1.97% | 2.63% | 3.29% | 3.95% | |
| $321,451 – 408,200 | 32.00% | 2.21% | 2.94% | 3.68% | 4.41% | |
| $408,201 – 612,350 | 35.00% | 2.31% | 3.08% | 3.85% | 4.62% | |
| Over $612,000 | 37.00% | 2.38% | 3.17% | 3.97% | 4.76% | |
| Single | $0 – 9,700 | 10.00% | 1.67% | 2.22% | 2.78% | 3.33% |
| $9,701 – 39,475 | 12.00% | 1.70% | 2.27% | 2.84% | 3.41% | |
| $39,476 – 84,200 | 22.00% | 1.92% | 2.56% | 3.21% | 3.85% | |
| $84,201 – 160,725 | 24.00% | 1.97% | 2.63% | 3.29% | 3.95% | |
| $160,726 – 204,100 | 32.00% | 2.21% | 2.94% | 3.68% | 4.41% | |
| $204,101 – 510,300 | 35.00% | 2.31% | 3.08% | 3.85% | 4.62% | |
| OVER $510,300 | 37.00% | 2.38% | 3.17% | 3.97% | 4.76% | |
The taxable equivalent yields assume the highest marginal tax rates applicable to the income level.
TAX ON DIVIDENDS & LONG-TERM CAPITAL GAINS
| Tax Rate | Single | Married Filing Jointly |
| 0% | $0 – 39,375 | $0 – 78,750 |
| 15% | $39,376 – 434,550 | $78,751 – 488,850 |
| 20% | Over $434,550 | Over $488,850 |
Short-term capital gains (on assets held 1-year or less) are taxed at the ordinary income tax rate.
INDIVIDUAL AMOUNT
| Filing Status (Flat rate 26%) |
Exemption | 28% Rate Applies to Income Above: | Phase-out income level |
| Single | $71,700 | $191,500 | $510,300 |
| Married Filing Jointly | $111,700 | $191,500 | $1,020,600 |
| Married Filing Single | $55,850 | $95,750 | $510,300 |
| Estates & Trusts | $25,000 | $191,500 | $83,500 |
2019 STANDARD DEDUCTION
| 2017 | 2018 | 2019 | ||||
| Filing Status | Annual | Additional for age 65+ or blind |
Annual | Additional for age 65+ or blind |
Annual | Additional for age 65+ or blind |
| Married Filing Jointly | $12,700 | $1,250 / $2,500 | $24,000 | $1,300 / $2,600 | $24,400 | $1,300 / $2,600 |
| Single | $6,350 | $1,550 | $12,000 | $1,600 | $12,200 | $1,650 |
| Head of Household | $9,350 | $1,550 | $18,000 | $1,600 | $18,350 | $1,650 |
Personal exemptions have been eliminated by the 2017 Tax Act and replaced with the higher standard deduction. Married couples can take the additional deduction indicated as long as at least one of the two is age 65. If both are age 65, double the additional amount can be deducted.
CORPORATE TAX & AMT
| Corporate Flat Tax Rate | |
| Corporate Tax Rate | Flat 21% |
| Corporate AMT | Eliminated |
199A INCOME THRESHOLDS FOR PASS-THROUGH ENTITIES
| 199A Income Thresholds | ||
| 2018 | 2019 | |
| Married Filing Jointly | $315,000 | $321,400 |
| Married Filing Single | $157,500 | $160,725 |
| Single | $157,500 | $160,725 |
| Head of Household | $157,500 | $160,725 |
The 2017 Tax Act added IRC Section 199A that includes a special deduction for businesses that do not operate as a C-corporation and instead “pass- through” their qualified business income (QBI) to their individual tax return. Businesses structured as Sole proprietorships, and partnerships set up as limited liability companies (LLC) or Family Limited Partnerships (FLP), as well as S-Corporations and trusts may be able to deduct 20% of QBI under 199A. Certain service businesses structured as pass-throughs — such as law firms, accounting firms, investment firms and physician practices — can take advantage of the 20% write-off only if taxable income is less than the 199A threshold amount. The 20% deduction is phased out for taxable income above the threshold.
2019 CONTRIBUTION AND COMPENSATION LIMITS FOR QUALIFIED RETIREMENT PLANS
| Limit | 2018 | 2019 |
| Pre-tax deferrals under 401(k), 403(b) & 457(b) plans | $18,500 | $19,000 |
| Catch-up contributions for participants age 50 or older | $6,000 | $6,000 |
| Defined Contribution Plan annual contribution limit | $55,000 | $56,000 |
| Defined benefit plan annual benefit/accrual limit | $220,000 | $225,000 |
| Annual compensation limit | $275,000 | $280,000 |
| Highly compensated employee – definition | $120,000 | $125,000 |
| Key employee- definition for Top-Heavy plans | $175,000 | $180,000 |
| Threshold to lengthen distribution period under an ESOP | $220,000 | $225,000 |
| ESOP limit to determine the max balance subject to 5-year distribution period | $1,105,000 | $1,130,000 |
| Pre-tax deferrals under SIMPLE 401(k) or SIMPLE IRA | $12,500 | $13,000 |
| SIMPLE 401(k)/IRA catch-up contributions (age 50 or older) | $3,000 | $3,000 |
| Traditional/ROTH IRA contribution limit | $5,500 | $6,000 |
| Traditional/ROTH IRA catch-up contributions (age 50 or older) | $1,000 | $1,000 |
TRADITIONAL IRA DEDUCTIBILITY
| Filing Status | Employer Retirement Plan? | Modified AGI 2019 | Deductibility |
| Single | No | Any amount | Full |
| Yes | $64,000 or less $64,000 – $73,999 $74,000+ |
Full Partial None |
|
| Married Filing Jointly | Neither spouse covered | Any amount | Full |
| Yes. Spouse is either covered or not | $103,000 or less $103,001-$122,999 $123,000+ |
Full Partial None |
|
| No. But spouse is covered | $193,000 or less $193,001 – $202,999 $203,000+ |
Full Partial None |
ROTH IRA CONTRIBUTION PHASE-OUT
| ROTH IRA Contribution Income Phase-out | ||
| Married Filing Jointly | Married Filing Separately | Single Filer |
| $189,000 – $199,000 | $0 – $10,000 | $120,000 – $135,000 |
No annual income limit applies to a ROTH IRA conversion.
SOCIAL SECURITY
| Base Amount of Modified AGI Causing Social Security Benefits to be Taxable | ||
| 2019 | ||
| 50% Taxable | 85% Taxable | |
| Married Filing Jointly | $32,000 | $44,000 |
| Single | $25,000 | $34,000 |
| Maximum Earnings Before Social Security Benefits Are Reduced | ||
| 2018 | 2019 | |
| If under full retirement age, lose $1 for every $2 earned | $17,040 | $17,640 |
| In year of retirement, lose $1 for every $3 earned in months prior to full retirement | $45,360 | $46,920 |
| At full retirement age (FRA) | No Limit | No Limit |
Individuals with a modified adjusted gross income of $85,000 or more and married couples whose joint income exceeds $170,000 pay a high-income surcharge on both their Medicare Part B premiums and Part D prescription drug plans. Surcharges, officially known as an income-related monthly adjustment amount, or IRMAA, are based on the last available income tax return.
| Maximum Compensation Subject to FICA (Social Security) Taxes | ||
| OASDI (Social Security) Maximum | $128,400 | $132,900 |
| HI (Medicare) Max | No Limit | No Limit |
LONG-TERM CARE INSURANCE PREMIUM DEDUCTIBILITY
| Base Amount of Modified AGI Causing Social Security Benefits to be Taxable | |||||
| Age | 40 or less | 41-50 | 51-60 | 61-70 | Over 70 |
| 2018 | $420 | $780 | $1,560 | $4,160 | $5,200 |
| 2019 | $420 | $790 | $1,580 | $4,226 | $5,270 |
HEALTH SAVINGS ACCOUNT (HSA) LIMITS
| Filing Status | Annual Contribution Limit | |
| 2018 | 2019 | |
| Single | $3,450 | $3,500 |
| Family | $6,900 | $7,000 |
| Catch-up (age 55+) | $1,000 | $1,000 |
FEDERAL ESTATE, GIFT & GENERATION-SKIPPING TAX EXEMPTIONS & RATES
| 2017 | 2018 | 2019 | |
| Annual Exclusion Gift | |||
| Single | $14,000 | $15,000 | $15,000 |
| Married Couple / Gift Splitting | $28,000 | $30,000 | $30,000 |
| Gifts to Non-citizen Spouse | $149,000 | $152,000 | $155,000 |
| Lifetime Gift Tax Exemption (Indexed) | $5,490,000 | $11,180,000 | $11,400,000 |
| Maximum Gift Tax Rate | 40% | 40% | 40% |
| Estate Tax Exemption (Indexed with portability 1) | $5,490,000 | $11,180,000 | $11,400,000 |
| Maximum Estate Tax Rate | 40% | 40% | 40% |
| Generation-Skipping Tax (GST) Exemption (Indexed) | $5,490,000 (no portability) | $11,180,000 (portability) | $11,400,000 (portability) |
| Maximum GST Tax Rate | 40% | 40% | 40% |
| Special Use Valuation (IRC 2032A) | $1,120,000 | $1,140,000 | $1,160,000 |
| Section 6166 2% limit – deferred estate tax | $1,490,000 | $1,520,000 | $1,550,000 |
| States with Estate or Inheritance Taxes | CT, DC, DE, HI, IL, IA, KY, ME, MD, MA, MN, NE, NJ, NY, OR, PA, RI, VT, WA | ||
1 Portability of the federal estate tax exemption is defined as if one spouse dies and does not make full use of his/her exemption, the surviving spouse can make an election to utilize the deceased spouse’s unused federal estate tax exemption in addition to his/her own exemption.
