2020 IRS Limit Updates Your Company Should Be Aware Of

As the year winds down, many people are using this time as a chance to look back on everything they've accomplished in 2019. But here at Future Systems, we're looking ahead to 2020. Specifically the 2020 IRS changes that will impact your company. You don't want to be caught unaware when January 1st rolls around. Take a look at these updates you should be aware of.

Major Limitation Changes for 2020

• The 415 (c) contribution limit applicable to defined contribution retirement plans increased from $56,000 to $57,000
• The 401 (a) (17) annual compensation limit applicable to retirement plans increased from $280,000 to $285,000
• The elective deferral limit increased to $19,500

Updated Tax Brackets

Along with updated tax brackets for those who file as both single and married, the standard deduction is now higher. For singles, this was raised to $12,400, and for married people filing jointly in 2020, this was raised to $24,800. Personal exemptions were also eliminated. 

Other important updates include a change in contribution limits for 401(k) and 403(b), moving from $19,000 in 2019 up to $19,500. Plus, people who are over 50 can now contribute up to $6,500. Alongside this change, the lifetime gift and estate tax exemption has climbed up to $11.58 million per individual, a $118,000 increase from 2019. This update helps protect your loved ones from federal estate and gift taxes when you die.

These items are just the tip of the iceberg when it comes to changes. Not sure how this applies to your business? Let the experts at Future Systems help. Contact us today to speak to a member of our knowledgeable team about the professional Tax Pay & File services we can provide your business.