Key Numbers for 2021 Tax Year
Presented by Ben Murphy, CPA, PFS™, CPFA® :
This material has been provided for general informational purposes only and does not constitute either tax or legal advice.
Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Individual Income Tax |
|
| Unmarried Individual (Other than Surviving Spouse and Head of Household) | |
| If taxable income is: | The tax rate of taxable income is: |
| $9,950 and under | 10% of the taxable income |
| Over $9,950 but not over $40,525 | $995 plus 12% of the excess over $9,950 |
| Over $40,525 but not over $86,375 | $4,664 plus 22% of the excess over $40,525 |
| Over $86,375 but not over $164,925 | $14,751 plus 24% of the excess over $86,375 |
| Over $164,925 but not over $209,425 | $33,603 plus 32% of the excess over $164,925 |
| Over $209,425 but not over $523,600 | $47,843 plus 35% of the excess over $209,425 |
| Over $523,600 | $157,804.25 plus 37% of the excess over $523,600 |
| Married Individual Filing Jointly and Surviving Spouse | |
| $19,900 and under | 10% of the taxable income |
| Over $19,900 but not over $81,050 | $1,990 plus 12% of the excess over $19,900 |
| Over $81,050 but not over $172,750 | $9,328 plus 22% of the excess over $81,050 |
| Over $172,750 but not over $329,850 | $29,502 plus 24% of the excess over $172,750 |
| Over $329,850 but not over $418,850 | $67,206 plus 32% of the excess over $329,850 |
| Over $418,850 but not over $628,300 | |
| Over $628,300 | |
| Married Individual Filing Separately | |
| If taxable income is: | The tax rate of taxable income is: |
| $9,950 and under | 10% of the taxable income |
| Over $9,950 but not over $40,525 | $995 plus 12% of the excess over $9,950 |
| Over $40,525 but not over $86,375 | $4,664 plus 22% of the excess over $40,525 |
| Over $86,375 but not over $164,925 | $14,751 plus 24% of the excess over $86,375 |
| Over $164,925 but not over $209,425 | $33,603 plus 32% of the excess over $164,925 |
| Over $209,425 but not over $314,150 | |
| Over $314,150 | $84,496.75 plus 37% of the excess over $314,150 |
| Head of Household | |
| If taxable income is: | The tax rate of taxable income is: |
| $14,200 and under | 10% of the taxable income |
| Over $14,200 but not over $54,200 | $1,420 plus 12% of the excess over $14,200 |
| Over $54,200 but not over $86,350 | $6,220 plus 22% of the excess over $54,200 |
| Over $86,350 but not over $164,900 | $13,293 plus 24% of the excess over $86,350 |
| Over $164,900 but not over $209,400 | $32,145 plus 32% of the excess over $164,900 |
| Over $209,400 but not over $523,600 | $46,385 plus 35% of the excess over $209,400 |
| Over $523,600 | |
Trusts and Estates |
|
| If taxable income is: | The tax is: |
| $2,650 and under | 10% of the taxable income |
| Over $2,650 but not over $9,550 | $265 plus 24% of the excess over $2,650 |
| Over $9,550 but not over $13,050 | $1,921 plus 35% of the excess over $9,550 |
| Over $13,050 | |
Qualified Business Income
For taxable years beginning in 2021, the threshold amount under Section 199A(e)(2) is $329,800 for married individuals filing jointly, $164,925 for married individuals filing separately, and $164,900 for unmarried individuals and heads of households.
The Tax Cuts and Jobs Act (TCJA) reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent.
Standard Deductions |
|||
| Married Filing Jointly and Surviving Spouse | $25,100 | Married Filing Separately | $12,550 |
| Single | $12,550 | Head of Household | $18,800 |
Kiddie Tax |
| Applies to unearned income more than $2,200 for children younger than 18 (and full-time students between ages 19 and 24 whose earned income does not exceed half of their support for the year).
The TCJA modified the tax rates and brackets to calculate the tax on unearned income. The SECURE Act of 2019, however, rolled back the kiddie tax to pre-2018 rules. Therefore, net unearned income over the threshold amount of $2,200 for 2020 is taxed using the parents’ tax rates. |
AMT |
||
| Exemption | Phaseout | |
| Married Individual Filing Jointly and Surviving Spouse | $114,600 | $1,047,200 |
| Single | $73,600 | $523,600 |
| Married Individual Filing Separately | $57,300 | $523,600 |
| Trusts and Estates | $25,700 | $85,650 |
Long-Term Capital Gains and Qualified Dividend Tax |
|||
| Capital Gains Tax Rate | Unmarried | Married Filing Jointly | |
| 20%* | $445,831+ | $501,601+ | |
| 15%* | $40,401–$445,830 | $80,801–$501,600 | |
| 0% | $0–$40,400 | $0–$80,800 | |
| *Additional 3.8% unearned income Medicare contribution tax applies to the lesser of net investment income or modified adjusted gross income (MAGI) above the following thresholds: | |||
| Married Filing Jointly | $250,000 | Married Filing Separately | $125,000 |
| Single | $200,000 | Head of Household | $200,000 |
Health Savings Account (HSA) Maximum Contribution Limits |
|
| Self-Only Coverage | If younger than 55: $3,600
If age 55–65: $4,600 |
| Family Coverage | If younger than 55: $7,200
If age 55–65: $8,200 |
Retirement Plan Limits |
|
| 401(k), SARSEP, Section 457(b), 403(b) Elective Deferral Limit | $19,500 |
| Age 50+ Catch-Up for 401(k), SARSEP, 457(b), 403(b) | $6,500 |
| SIMPLE Elective Deferral Limit | $13,500 |
| Age 50+ Catch-Up for SIMPLE IRA | $3,000 |
| Traditional and Roth IRA Contributions | $6,000 |
| Age 50+ Catch-Up for IRA and Roth IRA | $1,000 |
| Section 415 Limit (Defined Contribution Plan) | $58,000 |
| Defined Benefit Plan Benefit Limit | $230,000 |
| Annual Compensation Limit for QRP, SEP, and 403(b) | $290,000 |
| Highly Compensated Definition | $130,000 |
| Control Employee | $115,000 |
| Key Employee in Top-Heavy Plan Definition | $185,000 |
IRA Deduction Phaseout for Active Participants |
||
| Filing Status | Starting at: | Fully Phased Out at: |
| Single or Head of Household | $66,000 | $76,000 |
| Married Filing Jointly or Qualifying Widow(er) | $105,000 | $125,000 |
| Married Filing Jointly and Spouse Is Active Participant in an Employer Plan | $198,000 | $208,000 |
| Married Filing Separately and Either Spouse Is Active Participant in an Employer Plan | $0 | $10,000 |
Roth Contribution Income Limits |
||
| Filing Status | Starting at: | Fully Phased Out at: |
| Single | $125,000 | $140,000 |
| Married Filing Jointly | $198,000 | 208,000 |
| Married Filing Separately | $0 | $10,000 |
Business Health Insurance |
|
| Health Insurance Premium Deduction for Self-Employed | 100% |
| Limit on Employee Health Insurance Credit for Small Employers | $27,800 |
Education Planning |
|
| U.S. Savings Bond Income Exclusion Phaseout | Modified AGI $124,800 to $154,800 (joint)
Modified AGI $83,200 to $98,200 (others) |
| Coverdell Education Savings Account (Education IRAs) Annual Contribution Limit | $2,000 |
| Coverdell Education Savings Account Phaseout | Modified AGI $190,000 to $220,000 (joint) Modified AGI $95,000 to $110,000 (others) |
| $2,500 American Opportunity Tax (HOPE) Credit Phaseout | Modified AGI $160,000 to $180,000 (joint) Modified AGI $80,000 to $90,000 (others) |
| $2,000 Lifetime Learning Credit Phaseout | Modified AGI in excess of $119,000 (joint) Modified AGI in excess of $59,000 (others) |
| Phaseout of $2,500 Interest Deduction on Education Loans | Modified AGI $140,000 to $170,000 (joint) Modified AGI $70,000 to $85,000 (others) |
| 2020-2021 Tuition and Fees Increase at a 4-Year College | Public college: 1.1% in-state student; 0.9% out-of-state student Private college: 2.1% |
| 2020-2021 Total Average Yearly Cost at a 4-Year College | $26,820 public in-state;
$43,280 public out-of-state; |
Federal Estate and Gift Tax |
|
| Annual Gift Tax Exclusion per Donee | $15,000 |
| Annual Gift Exclusion to Non-U.S.-Citizen Spouse | $159,000 |
| Estate Tax Exemption | $11,700,000 |
| Lifetime Gift Tax Exemption | $11,700,000 |
| Generation-Skipping Transfer Tax Exemption | $11,700,000 |
| Special Use (Section 2032A) Valuation Reduction | $1,190,000 |
Long-Term Care Premium Deductions |
|
| Qualified LTC Insurance Deductions: Subject to 10% of AGI Medical Expense Floor | |
| Age | Limit |
| 40 and younger | $450 |
| 41–50 | $850 |
| 51–60 | $1,690 |
| 61–70 | $4,520 |
| 71 and older | $5,640 |
Please note: Indemnity policy benefit payments that exceed the higher of the cost of long-term care or $400 per day will be taxed as income.
Medicaid |
|
| Community Spouse Resource Allowance | $26,076 minimum; $130,380 maximum |
| Monthly Maintenance Allowance | $2177.50 minimum; $3,259.50 maximum |
| Home Equity Limit | $603,000 (state can opt to increase to $906,000) |
| “Income Cap” State Income Limit | $2,382 |
Social Security |
|
| CPI Increase in Benefits | 1.3% |
| Maximum Monthly Benefit at Full Retirement | $3,148 month |
| Retirement Earnings Exempt Amount Under FRA | $18,960; $1 withheld for every $2 earned more than this amount |
| Retirement Earnings Exempt Amount Year of FRA | $50,520; $1 withheld for every $3 earned more than this amount |
Medicare |
|
| Medicare Part A (if applicable) Monthly Premium |
$471 for fewer than 30 quarters of coverage
$259 for between 30 and 39 quarters of coverage |
| Medicare Part A Deductible and Coinsurance |
$1,484 for 1–60 days
An additional $371 for 61–90 days $742 for 91–150 days All costs > 150 days |
| Medicare Part A Deductible for Skilled Nursing Facility in a Benefit Period |
$185.50 per day during 21–100 days |
| Medicare Part B Deductible |
$203 per year |
Medicare Premium |
|||
| Individual Filer | Married Filing Jointly | ||
| Medicare Part B Monthly PremiumSome Medicare beneficiaries may pay less if certain conditions are met. |
$148.50
$207.90 $297.00 $386.10 $475.20 $504.90 |
$0–$88,000
$88,001–$111,000 $111,001–$138,000 $138,001–$165,000 $165,001–$499,999 $500,000 and greater |
$0–$176,000
$176,001–$222,000 $222,001–$276,000 $276,001–$330,000 $330,001–$749,999 $750,000 and greater |
| Medicare Part D Deductible | The amount paid for Part D deductibles, copayments, and/or coinsurance varies by plan. | ||
| Medicare Part D Monthly Premium Surcharge |
(no surcharge)
$12.30 + plan premium $31.80 + plan premium $51.20 + plan premium $70.70 + plan premium $77.10 + plan premium |
$0–$88,000
$88,001–$111,000 $111,001–$138,000 $138,001–$165,000 $165,001–$499,999 $500,000 and greater |
$0–$176,000
$176,001–$222,000 $222,001–$276,000 $276,001–$330,000 $330,001–$749,999 $750,000 and greater |
Please note: Medicare premiums are based on MAGI from two years prior to the current premium year. These are 2021 Medicare premium costs and thresholds and are based upon 2019 MAGI.
Payroll Taxes |
||
| Employee | Self-Employed | |
| Social Security Tax | 6.2% | 12.4% |
| Social Security Wage Base | $142,800
|
|
| Medicare Tax | 1.45% | 2.9% |
| Additional Medicare Tax | 0.9% on Earnings Higher than the Following Thresholds: | |
| Single or Head of Household | $200,000 | |
| Married Filing Jointly | $250,000 | |
| Married Filing Separately | $125,000 | |
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Ben Murphy is a financial advisor located at Global Wealth Advisors 601 N. Marienfeld, Suite 322, Midland, TX 79701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA / SIPC, a Registered Investment Adviser. Financial planning services offered through Global Wealth Advisors are separate and unrelated to Commonwealth. He can be reached at (325) 207-5772 or at info@gwadvisors.net.
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