Nonprofit Resources
Key Federal Tax Figures for 2020
We are pleased to provide our annual Key Federal Tax Figures summary, which we hope will be a helpful reference tool for you throughout the year. Download or print your copy here:
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There are several key points we’d like to note.
Increase in Standard Deduction
The tax reform legislation enacted in December 2017 nearly doubled the standard deduction. For 2020, the new higher amounts have increased again by an inflation adjustment. For a married couple filing a joint return, the increase is $400 to $24,800. Similar increases occurred for heads of households, single individuals, and married couples filing separate returns.
Automobile Mileage Rates
The tax-free mileage rate for business use of a vehicle decreased to 57.5 cents per mile from 58.0 cents per mile, a decrease of 0.5 cents per mile. Similarly, the tax-deductible mileage rate for medical mileage decreased to 17.0 cents per mile from 20.0 cents per mile while the mileage rate for charitable mileage remained unchanged at 14.0 cents per mile. Note that with the suspension of the moving expense deduction, there is no mileage reimbursement rate for moving mileage.
Individual Coverage and Excepted Benefit Health Reimbursement Accounts
In 2019, the Departments of Health and Human Services, Labor, and Treasury issued new rules for employers who wish to reimburse employees for certain health-related expenses. The Individual Coverage Health Reimbursement Arrangement (ICHRA) can be used (with certain restrictions) to reimburse premiums for individual health insurance chosen by the employee. There is no limit on the amount an employer can contribute to an ICHRA. Further, a more limited “excepted-benefit” HRA (EBHRA) allows employers to reimburse dental, vision, long-term care, and other expenses not covered by a traditional primary plan. The limit for employer contributions to an EBHRA is $1,800.
Other Inflation Adjustments for 2020
Inflation adjustments affect many areas, but not everything. Examine the specific issues that affect your organization carefully. Here are some examples:
| In 2019 and Returns for 2019 | In 2020 and Returns for 2010 |
|
|---|---|---|
| Foreign earned income exclusion | $105,900 | $107,600 |
| OASDI maximum wage base | $132,900 | $137,700 |
| Maximum annual contribution to defined contribution plan | $56,000 | $57,000 |
| Maximum salary deduction for 401(k)/403(b) | $19,000 | $19,500 |
| 401(k)/403(b) “catch-up” limit | $6,000 | $6,500 |
| IRA contribution limit | $6,000 | $6,000 |
| IRA over 50 “catch-up” limit | $1,000 | $1,000 |
| Highly compensated employee limit | $125,000 | $130,000 |
| Annual gift tax exclusion amount | $15,000 | $15,000 |
Please contact us with any questions.
