The following table provides some important federal tax information for 2021, as compared with 2020. Some of the dollar amounts are unchanged, and some changed only slightly due to inflation.
| Social Security/ Medicare |
2021 |
2020
|
| Social Security Tax Wage Base |
$142,800 |
$137,700 |
| Medicare Tax Wage Base |
No limit
|
No limit |
| Employee portion of Social Security |
6.2% |
6.2% |
| Employee portion of Medicare |
1.45% |
1.45% |
| Individual Retirement Accounts |
2021 |
2020 |
| Roth IRA Individual, up to 100% of earned income |
$6,000 |
$6,000 |
| Traditional IRA Individual, up to 100% of earned Income |
$6,000 |
$6,000 |
| Roth and traditional IRA additional annual “catch-up” contributions for account owners age 50 and older |
$1,000 |
$1,000 |
| Qualified Plan Limits |
2021 |
2020 |
| Defined Contribution Plan limit on additions on Sections 415(c)(1)(A) |
$58,000 |
$57,000 |
| Defined Benefit Plan limit on benefits (Section 415(b)(1)(A)) |
$230,000 |
$230,000 |
| Maximum compensation used to determine contributions |
$290,000 |
$285,000 |
| 401(k), SARSEP, 403(b) Deferrals (Section 402(g)), & 457 deferrals (Section 457(b)(2)) |
$19,500 |
$19,500 |
| 401(k), 403(b), 457 & SARSEP additional “catch-up” contributions for employees age 50 and older |
$6,500 |
$6,500 |
| SIMPLE deferrals (Section 408(p)(2)(A)) |
$13,500 |
$13,500 |
| SIMPLE additional “catch-up” contributions for employees age 50 and older |
$3,000 |
$3,000 |
| Compensation defining highly compensated employee (Section 414(q)(1)(B)) |
$130,000 |
$130,000 |
| Compensation defining key employee (officer) |
$185,000 |
$185,000 |
| Compensation triggering Simplified Employee Pension contribution requirement (Section 408(k)(2)(c)) |
$650 |
$600 |
| Driving Deductions |
2021 |
2020 |
| Business mileage, per mile |
56 cents
|
57.5 cents |
| Charitable mileage, per mile |
14 cents |
14 cents |
| Medical and moving, per mile |
16 cents |
17 cents |
| Business Equipment |
2021 |
2020 |
| Maximum Section 179 deduction |
$1,050,000 |
$1,040,000 |
| Phase out for Section 179 |
$2.62
million
|
$2.59
million |
| Transportation Fringe Benefit Exclusion |
2021 |
2020 |
| Monthly commuter highway vehicle and transit pass |
$270 |
$270 |
| Monthly qualified parking |
$270 |
$270 |
| Standard Deduction |
2021 |
2020 |
| Married filing jointly |
$25,100 |
$24,800 |
| Single (and married filing separately) |
$12,550 |
$12,400 |
| Heads of Household |
$18,800 |
$18,650 |
| Domestic Employees |
2021 |
2020 |
| Threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc. |
$2,300 |
$2,200 |
Business Meals
|
2021 |
2020 |
| Deduction for eligible business-related food and beverage expenses |
100%* |
50%
|
| Estate Tax |
2021 |
2020 |
| Federal estate tax exemption |
$11.7 million
|
$11.58 million
|
| Maximum estate tax rate |
40% |
40% |
| Annual Gift Exclusion |
2021 |
2020 |
| Amount you can give each recipient |
$15,000 |
$15,000 |
* Provided by restaurants. This is part of the Consolidated Appropriations Act, signed into law on December 27, 2020. |
