The IRS has released its 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
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.
Photo credit: Andy Maquire
