Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2019.
Employer retirement plans
Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $19,000 in compensation in 2019 (up from $18,500 in 2018); employees age 50 and older can defer up to an additional $6,000 in 2019 (the same as in 2018).
Employees participating in a SIMPLE retirement plan can defer up to $13,000 in 2019 (up from $12,500 in 2018), and employees age 50 and older can defer up to an additional $3,000 in 2019 (the same as in 2018).
IRAs
The combined annual limit on contributions to traditional and Roth IRAs increased to $6,000 in 2019 (up from $5,500 in 2018), with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is phased out for the following modified adjusted gross income (AGI) ranges:
20182019Single/head of household (HOH)$63,000 - $73,000$64,000 - $74,000
Married filing jointly (MFJ)$101,000 - $121,000$103,000 - $123,000
Married filing separately (MFS)$0 - $10,000$0 - $10,000
The 2019 phaseout range is $193,000 - $203,000 (up from $189,000 - $199,000 in 2018) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.
The modified AGI phaseout ranges for individuals to make contributions to a Roth IRA are:
20182019Single/HOH$120,000 - $135,000$122,000 - $137,000
MFJ$189,000 - $199,000$193,000 - $203,000
MFS$0 - $10,000$0 - $10,000
Estate and gift tax
The annual gift tax exclusion for 2019 is $15,000, the same as in 2018.
The gift and estate tax basic exclusion amount for 2019 is $11,400,000, up from $11,180,000 in 2018.
Kiddie tax
Under the kiddie tax rules, unearned income above $2,200 in 2019 (up from $2,100 in 2018) is taxed using the trust and estate income tax brackets. The kiddie tax rules apply to: (1) those under age 18, (2) those age 18 whose earned income doesn't exceed one-half of their support, and (3) those ages 19 to 23 who are full-time students and whose earned income doesn't exceed one-half of their support.
Standard deduction
20182019Single$12,000$12,200
HOH$18,000$18,350
MFJ$24,000$24,400
MFS$12,000$12,200