Key Numbers for 2021 Tax Year

Key Numbers for 2021 with photo of calendar.

Presented by Ben Murphy, CPA, PFS™:

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;
$54,880 private

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, CPA, PFS™ 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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