While tax changes from 2017 to 2018 were extensive and caused quite a stir; the 2019 tax changes are mild but essential to know. Most of the differences between taxes of 2018 and taxes of 2019 are merely adjustments to numbers, brackets, and contributions. However, there are additional, important and potentially impactful changes as well.

Below you will find some fundamental changes for the 2019 tax season (Jan 2019 — Dec 2019), not to be confused with the current 2018 tax year filing season.

The new 2019 Federal Income Tax Rates.

While there are still seven tax brackets, the rates have changed, and income brackets have increased by roughly 2%. See 2019 Federal Income tax brackets below.

New 2019 Federal Income Tax Bracket Rates for long term Capital Gains.

Long-term (held for more than one year) Capital gains (the profit from the sale of property or investments) income brackets have also increased slightly from 2018. Don’t confuse this with short-term capital gains (held for one year or less), which is taxed at ordinary income tax bracket amounts (see above).

2019 Standard Deductions Have Increased.

While personal exemptions are still eliminated (as they were in 2018), the standard deductions have been increased slightly for 2019 from 2018.

Additional Key Tax Changes for the 2019 Tax Year 

Retirement plan contribution limits have been increased.

Retirement contributions have increased by $500 from 2018 and catch-up contributions (for those 50 and older) have been increased as well. See below for details.

• IRAs — contribution limit is increasing to $6,000 from $5,500 in 2018. If you’re 50 or older, you can add a $1,000 catch-up.
• Employer-sponsored plans — These include 401(k), 403(b), 457, TSP – contribution limit is increasing to $19,000 from $18,500 in 2018. If you’re 50 or older, you can add a $6,000 catch-up contribution.

The Affordable Care Act (ACA) penalty has been eliminated.

One of the significant changes in 2019 is the elimination of the ACA penalty. While this penalty was still in force in 2018, the 2019 tax year is finally ending this penalty, which could have a major, positive impact on many taxpayers.

Medical Expense Deductions

Because of the sweeping tax changes that took place in the 2018 tax year (that are still in place for 2019), fewer people are itemizing their deductions. If you are someone that will itemize deductions, you can itemize unreimbursed medical expenses that exceed 10% of your adjusted gross income (AGI). That is up from 7.5% (which means you get to deduct less).

Alimony is no longer deductible or taxable (for some)

If your divorce decree is issued after December 31, 2018, alimony is no longer deductible by the payor, nor taxable for the recipient. For divorce decrees before January 1, 2019, alimony will remain deductible and taxable.

We hope you have enjoyed this list of key tax changes for the 2019 tax year. For additional 2019 tax changes, you can go to https://www.irs.gov. The information contained in this article is not to be considered as tax advice, and as always if you have any questions, it is best to contact a tax professional.