The IRS has released it’s annual inflation adjusted tax numbers for 2021. Below we have highlighted some of the most relevant updates for tax brackets, retirement contributions, and estate and gifting limits, as compared to 2020 figures.

Individual Income Taxes
Income Tax Brackets – Single Tax Filer
2021 2020
10% Up to $9,950 Up to $9,875
12% $9,951 to $40,525 $9,876 to $40,125
22% $40,526 to $86,375 $40,126 to $85,525
24% $86,376 to $164,925 $85,526 to $163,300
32% $164,926 to $209,425 $163,301 to $207,350
35% $209,426 to $523,600 $207,351 to $518,400
37% Over $523,600 Over $518,400
Standard Deduction $12,550 $12,400
Long-Term Capital Gains
0% Up to $40,400 Up to $40,000
15% $40,401 to $445,850 $40,001 to $441,450
20% Over $445,850 Over $441,450
Income Tax Brackets – Married Filing Jointly
2021 2020
10% Up to $19,900 Up to $19,750
12% $19,901 to $81,050 $19,751 to $80,250
22% $81,051 to $172,750 $80,251 to $171,050
24% $172,751 to $329,850 $171,051 to $326,600
32% $329,851 to $418,850 $326,601 to $414,700
35% $418,851 to $628,300 $414,701 to $622,050
37% Over $628,301 Over $622,050
Standard Deduction $25,100 $24,800
Long-Term Capital Gains
0% Up to $80,800 Up to $80,000
15% $80,801 to $501,600 $80,001 to $496,600
20% Over $501,600 Over $496,600
Retirement Plan Contribution Limits
2021 2020
401(k), 403(b), 457 plans $19,500 $19,500
–   50+ catch up contribution $6,500 $6,500
IRA – Traditional & Roth $6,000 $6,000
–   50+ catch up contribution $1,000 $1,000
SIMPLE IRA $13,500 $13,500
–   50+ catch up contribution $3,000 $3,000
Defined Contribution Plan $58,000 $57,000
Gift & Estate Tax
2021 2020
Annual Gift Exclusion $15,000 $15,000
Federal Estate Tax & Gift Tax Exemption $11,700,000 $11,580,000
Maximum Transfer Tax Rate 40% 40%
Annual Gift Exclusion to Non-U.S. Citizen Spouse $159,000 $157,000

 

 

 

In addition to the tax figures above, the Net Investment Income Tax (NIIT) applies at a rate of 3.8% to certain net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts. The threshold amounts are $200,000 for single tax-payers and $250,000 for married filing jointly.

If you have any questions, please feel free to contact us or schedule a conversation.

Author:
Thomas Burleigh, CFP®
Wealth Manager
Tom Burleigh, CFP, Wealth Manager

Disclosure:

This article does not contain any legal or tax advice. You should always consult with your attorney, accountant, or other professional advisors before changing or implementing any tax, investment, or estate planning strategy. This is not an offer or a solicitation to buy or sell securities. This may not be construed as investment advice and does not give investment recommendations. Any opinion included in this article constitutes the judgment of CMH Wealth Management, LLC as of the date of this report and are subject to change without notice. 

Additional information, including management fees and expenses, is provided on CMH Wealth Management, LLC’s Form ADV Part 2. Past performance is not a guarantee of future results.

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