Check out our tax news roundup for February 2020. This month we talk tax rates, IRS Publication 15-T, the estimated IRS refund schedule and more.
State Individual Income Tax Rates and Brackets for 2020
Individual income taxes are a major source of state government revenue, accounting for 37 percent of state tax collections.[1] Their prominence in public policy considerations is further enhanced in that individuals are actively responsible for filing their income taxes, in contrast to the indirect payment of sales and excise taxes.
Forty-three states levy individual income taxes. Forty-one tax wage and salary income, while two states—New Hampshire and Tennessee—exclusively tax dividend and interest income. Seven states levy no income tax at all. Tennessee is currently phasing out its Hall Tax (an income tax applied only to dividends and interest income), with complete repeal scheduled for tax years beginning January 1, 2021.[2]
Of those states taxing wages, nine have single-rate tax structures, with one rate applying to all taxable income. Conversely, 32 states levy graduated-rate income taxes, with the number of brackets varying widely by state. Kansas, for example, imposes a three-bracket income tax system. At the other end of the spectrum, Hawaii has 12 brackets. Top marginal rates range from North Dakota’s 2.9 percent to California’s 13.3 percent. Continue reading on the Tax Foundation.
IRS Publication 15-T & Tax Estimator for New (2020) W-4 Form
While taxpayers can still make use of the worksheets found in the instructions within Publication 505 for Form W-4, the proposed regulations specified in Publication 15-T are geared toward the use of the new IRS Tax Withholding Estimator by taxpayers while filling-out the new W-4 form. Taxpayers should use their results from the Tax Withholding Estimator to help them complete a new (2020) Form W-4, Employee’s Withholding Certificate whenever they are required to do so. Continue reading on Insightful Accountant.
New Bill Fixes Damaging Taxation of Business Investment
Until now, every major proposal to make the 2017 tax cuts permanent has neglected to address the expiration of the most pro-growth piece of the reform: full and immediate expensing.
Full expensing fixes a damaging quirk in the U.S. tax code that raises the cost of investing in America and thus makes it harder to create jobs, increase productivity, and raise wages.
The Tax Cuts and Jobs Act made it easier to invest by lowering the corporate tax rate and letting businesses deduct spending on important investments such as equipment and tools in the same way they currently deduct their spending on employee wages, advertising costs, and rent.
The permanent rate cut received most of the media attention, but the investment rules are equally important, and they’re only temporary. The 2017 law allows 100% expensing for five years, through 2022, then phases it out over the next five years. Continue reading on The Daily Signal.
In Talks on Taxing Tech Companies, It’s America vs. the World
The Trump administration and leaders of other wealthy nations remain at odds over how to tax technology companies and other businesses that operate online, negotiators confirmed on Friday, an impasse that threatens to inflame global trade tensions if not resolved by year’s end.
Some 130 countries are engaged in the discussions, through the Organization for Economic Cooperation and Development, that are trying to set new rules for taxing multinational companies in an increasingly digital economy.
Those rules could include international standards for which countries can tax activity that occurs online, and to what degree. They could also establish what would be an effective global minimum tax for multinational companies that shift their profits to low-tax havens like Ireland and Bermuda. Continue reading on The New York Times.
2020 IRS Income Tax Refund Chart Shows Estimated Refund Dates
This easy-to-use chart shows estimated tax refund dates. As a tax professional, it’s important for you to be aware of the dates that the IRS is giving the public. So that if any issues arise, you’re aware of the issues and next steps to fix them. Continue reading on CPA Practice Advisor.
