News, Taxes

The new 2019 federal income tax brackets and rates

We’re just about to enter the 2018 tax filing season. But already the IRS has issued new federal income tax brackets for 2019. Confused? That’s completely understandable.

So… while you’re preparing your 2018 tax return in the spring of 2019, you should completely ignore the information in this article. It’ll only serve to confuse you.

But, when you’re not preparing your 2018 return, this information will be 100 percent relevant – from January 1, 2019, forward. Use this 2019 information now, so you’ll be prepared for filing your taxes when 2019 ends. You may need to make adjustments in your withholding taxes, or your tax estimates if you’re self- employed.

Why tax brackets and other tax numbers are changing

It all has to do with a provision in the tax code known as indexing. Each year, the IRS adjusts tax brackets to account for inflation. For example, if the inflation rate for the past year is 2%, the IRS will adjust all income brackets up by roughly two percent.

For example, if a particular tax bracket begins at a taxable income of $40,000 one year, that number will be increased to $40,800 for the following year. The IRS also likes round numbers. Percentages will be no better than approximate, since numbers will be rounded up in increments of $25, $50, or even $100.

Read the full story at Forbes.
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