2019 Tax Update
Jacquelyn Himes, CPA
Focused on You. Dedicated to Your Success.
December 17, 2018

The IRS has announced new limits that all taxpayers need to know. In 2019, the income limits for all tax brackets and all filers will be adjusted for inflation. The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $510,300 and higher for single filers and $612,350 and higher for married couples filing jointly as follows:

Standard Deduction and Personal Exemption
The standard deduction for single filers will increase by $200 and by $400 for married couples filing jointly.
The personal exemption for 2019 remains eliminated.

2019 Standard Deduction and Personal Exemption

Filing Status Deduction Amount
Single $12,200
Married, Filing Jointly $24,400
Head of Household $18,350

Tax Brackets and Rates for 2019
Alternative Minimum Tax (AMT)
The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent.

The AMT exemption amount for 2019 is $71,700 for singles and $111,700 for married couples filing jointly. In 2019, the 28 percent AMT rate applies to excess AMTI of $194,800 for all taxpayers ($97,400 for married couples filing joint returns).

AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2019, the exemption will start phasing out at $510,300 in AMTI for single filers and $1,020,600 for married taxpayers filing jointly.

Earned Income Tax Credit
The maximum Earned Income Tax Credit in 2019 for single and joint filers is $529, if the filer has no children. The maximum credit is $3,526 for one child, $5,828 for two children, and $6,557 for three or more children. All these are relatively small increases from 2018.

2019 Earned Income Tax Credit Parameters
Child Tax Credit
The child tax credit totals at $2,000 per qualifying child and is not adjusted for inflation. However, the refundable portion of the Child Tax Credit, also known as the Additional Child Tax Credit, is adjusted for inflation. The Additional Child Tax Credit will remain at $1,400 for 2019.

Capital Gains
Long-term capital gains are taxed using different brackets and rates than ordinary income.

2019 Capital Gains Brackets
Qualified Business Income Deduction (Sec. 199A)
The Tax Cuts and Jobs Act includes a 20 percent deduction for pass-through businesses against up to $160,700 of qualified business income for unmarried taxpayers and $321,400 for married taxpayers 

Annual Exclusion for Gifts
In 2019, the first $15,000 of gifts to any person are excluded from tax. The exclusion is increased to $155,000 for gifts to spouses.

Feel free to call any member of our team at 610-828-1900 with questions. You can also contact Jackie Himes, CPA, director – tax services at Jacquelyn.Himes@MCC-CPAs.com or me at Marty.McCarthy@MCC-CPAs.com . We are always happy to help.


Martin C. McCarthy, CPA, CCIFP
Managing Partner 
McCarthy & Company, PC 

Disclaimer:  This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).