2021
Please be aware that a large number of individual tax items of the 2018 Tax Act sunset in 2025.
New Alimony Rules: For Agreements executed or modified after 12/31/2018, alimony received is not income and alimony paid is not a deduction. However, parties can elect to follow any new rules that will be effective in 2026 as long as indicated in executed agreement.
Auto Mileage Rates for 2021: Released December 22, 2020
Business—56 cents per mile
Charity—14 cents per mile
Medical—17 cents per mile
Moving—17 cents per mile
Gift Exclusion Annual Amount for 2021:
$15,000
Foreign Earned Income Exclusion Annual Amount for 2021:
$108,700
Long-Term Care Insurance Premium Limits for 2021:
Age 40 or less: $ 450
More than 40, less than 51: $850
More than 50, less than 61: $1,690
More than 60, less than 71: $4,520
More than 70: $5,640
HSA contribution amounts for 2021:
Individual— $3,600 (+$1,000 for over age 55)
Family— $7,200 (+$1,000 for over age 55)
Compensation limits (401, 404, 408) for 2021:
$290,000
Election to Expense Certain Depreciation Assets (Section 179) for 2021:
$1,050,000 (limit on capital purchases: $2,620,000). Maximum Sport Utility Vehicle cost is limited to $26,200.
Standard Deductions for 2021:
$25,100 (MFJ, Surviving Spouse);
$18,800 (HOH);
and $12,550 (Single, MFS).
Additional deduction for aged or blind is $1,350 ($1,700 for unmarried taxpayers).
Additional Medicare Tax for 2021:
3.8% surtax on net investment income and 0.9% Medicare contributions tax on earned income when adjusted gross income exceeds:
$250,000 (MFJ, Surviving Spouse);
$200,000 (HOH and Single);
and $125,000 (MFS)
Deduction for Pass-through (includes Sole Shareholders) Entities:
20% of Qualified Business Income (QBI) limited to 50% of W-2 Wages or 25% of wages and 2.5% of Qualified Property Unadjusted Basis. Income limitations for service industries. QBI thresholds are $329,800 (MFJ); $164,925 (S/HOH/MFS).
Medicare Coverage and Part D Costs for 2021:
– Monthly Medicare payments are $148.50 for MAGI under $88,000 for Single/MFS and under $176,000 for MFJ. Medicare Part D Premiums are set at plan premium at this level. – Monthly Medicare payments are $207.90 for MAGI above $88,000 up to $111,000 for Single and above $176,000 up to $222,000 for MFJ. Monthly Medicare Part D Premiums are set at plan premium plus $12.30 at this level.
– Monthly Medicare payments are $297.00 for MAGI above $111,000 up to $138,000 for Single and above $222,000 up to $276,000 for MFJ. Monthly Medicare Part D Premiums are set at plan premium plus $31.80 at this level.
– Monthly Medicare payments are $386.10 for MAGI above $138,000 up to $165,000 for Single and above $276,000 up to $330,000 for MFJ. Monthly Medicare Part D Premiums are set at plan premium plus $51.20 at this level.
– Monthly Medicare payments are $475.20 for MAGI above $165,000 up to $500,000 for Single; above $330,000 up to $750,000 for MFJ; and above $88,000 up to $412,000 for MFS. Monthly Medicare Part D Premiums are set at plan premium plus $70.70 at this level.
– Monthly Medicare payments are $504.90 for MAGI above $500,000 for Single; above $750,000 for MFJ; and above $412,000 for MFS. Monthly Medicare Part D Premiums are set at plan premium plus $77.10 at this level.
Depreciation Component:
For business purposes of standard mileage rates are:
24 cents in 2015 and 2016;
25 cents in 2017 and 2018;
26 cents in 2019;
27 cents in 2020;
26 cents in 2021;
Estate and Gift Lifetime Exclusion for 2021:
$11.7 million ($23.4M for spousal portability election)
Social Security Numbers for 2021:
Wage Limit: $142,800
Quarter of Coverage: $1,470
Retirement Earnings Tax Exempt Amounts if under retirement age: $18,960/yr ($1,580/mo).
Retirement Earnings Tax Exempt Amounts for year attaining retirement age before birth date: $50,520/yr ($4,210/mo). Benefit Reduction for months prior to full retirement age: $1 of benefits for every $3 earnings over limit
FSA contribution amounts for 2021:
$2,750.
Retirement Deferrals for 2021:
401(k) — $19,500 (age 50 and over catch-up is $6,500)
Simple — $13,500 (age 50 and over catch-up is $3,000)
IRA — $6,000 (age 50 and over catch-up is $1,000)
Defined Contribution Plan — $58,000
Child Tax Credit in 2021:
$2,000 (Maximum refundable portion per child of $1,400) for children under 17 years of age. Other dependents qualify for a $500 nonrefundable credit.
Bonus Depreciation in First Year:
100% Bonus Depreciation in First Year until 12/31/2022.
Alternative Minimum Tax for 2021:
For 2021, the exemption amounts are $73,600 (Single/HOH); $114,600 (MFJ) and $57,300 for (MFS) and do not phase out until $523,600 (Single/HOH/MFS) and $1,047,200 (MFJ). The 28% rate applies to excess AMTI of $199,900 (MFJ) and $99,950 (Single/HOH/MFS)
ACA Penalty for 2021:
For 2021, the penalty for not maintaining minimum essential health coverage: $0