Our 2021 Handy Tax Guide is an easy-to-use reference that contains up-to-date facts to help guide you through this year.
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- Individual Income Tax RatesMarried Taxpayers Filing Jointly or Surviving Spouses
Taxable Income Over But Not Over Is Taxed At $0 $19,900 10% $19,900 $81,050 12% $81,050 $172,750 22% $172,750 $329,850 24% $329,850 $418,850 32% $418,850 $628,300 35% $628,300 37% Single TaxpayersTaxable Income Over But Not Over Is Taxed At $0 $9,950 10% $9,950 $40,525 12% $40,525 $86,375 22% $86,375 $164,925 24% $164,925 $209,425 32% $209,425 $523,600 35% $523,600 37% Heads of HouseholdTaxable Income Over But Not Over Is Taxed At $0 $14,200 10% $14,200 $54,200 12% $54,200 $86,350 22% $86,350 $164,900 24% $164,900 $209,400 32% $209,400 $523,600 35% $523,600 37% Estates & TrustsTaxable Income Over But Not Over Is Taxed At $0 $2,650 10% $2,650 $9,550 24% $9,550 $13,050 35% $13,050 37% Alternative Minimum TaxTax Rate on AMTI 26% up to $199,900 28% over $199,900 Exemption Amount Phase-Out Threshold Married Filing Jointly $114,600 $1,047,200 Married Filing Separately $57,300 $523,600 All Individual Tax Payers $73,600 $523,600 - Deductions & Exemptions
Standard Deduction* Elderly or Blind** Married Filing Jointly $25,100 $1,350 Single $12,550 $1,700 Head of Household $18,800 $1,700 Married Filing Separately $12,550 $1,350 Dependent of Another $1,100 *You are allowed to deduct the greater of your standard deduction or your itemized deductions.
Personal Exemptions - Repealed Deduction LimitationsSection 199A Qualified Business Income Deduction: 20% of domestic qualified business income (multiple limitations apply).
Medical & Dental Expenses: Excess over 7.5% AGI.
State & Local Taxes: $10,000 maximum deduction.
Mortgage Interest Deduction: Limited to $750,000 of principal for post 12/15/17 acquisition indebtedness.
Deductions Repealed (as of Jan 1, 2018)- Miscellaneous itemized deductions
- Interest on home equity indebtedness
- Moving expenses
CreditsTax credits of $2,000 per child and $500 per non-child dependent begin to phase out for taxpayers with modified adjusted gross income exceeding $400,000 for joint and $200,000 for single filers.
- Estimated Tax Payments
To avoid possible underpayment penalties, you are generally required to pay in through withholding or estimated tax payments the lesser of:
- One hundred percent of prior-year tax liability, (110% if AGI >$150,000) or,
- Ninety percent of current-year tax liability.
2021 Estimated Tax Payments for Individuals are due by:- April 15, 2022
- June 15, 2022
- September 15, 2022
- January 17, 2022
- Net Investment Income Medicare Surtax
The net investment income surtax on individuals equals 3.8% of the lesser of:
- Net investment income*, or
- The excess, if any, of
- The individual’s modified adjusted gross income, over the threshold amount.
Filing Status Threshold Amount Married Filing Jointly $250,000 Married Filing Separately $125,000 Single, Head of Household $200,000 *Common types of “net investment income” include interest, dividends, annuities, royalties, rents, net capital gain on investments, passive activities.
- Capital Gain & Qualified Dividend Tax Rates for Noncorporate Taxpayers
Single Taxpayer Married Filing Jointly Capital Gain Tax Rate* Net Investment Income Medicare Surtax** Combined Tax Rate $0-$40,400 $0-$80,800 0% 0% 0% $40,401-$200,000 $80,801-250,000 15% 0% 15% $200,001-$445,850 $250,001-$501,600 15% 3.8% 18.8% $445,851 $501,601 20% 3.8% 23.8% * Short-term capital gains (held less than 12 months) are taxed at the same rate as ordinary income, gains on collectibles (including metals) are taxed at 28%, recapture gains on real estate are taxed at 25%.
** The 3.8% Net Investment Income Medicare surtax only applies to “net investment income” as defined in IRC 1411.
- Estate Tax Rates
The estate tax and gift tax exemption for 2020 is $11.7 million. The estate and gift tax rate on amounts in excess of $11.7 million is 40%. The estate tax exemption is portable between spouses resulting in a $23.4 million exemption per couple regardless of ownership of assets.
Annual Gift Tax ExclusionGifts per person, $15,000
Joint gifts by spouse, $30,000
- Business Provisions
- Corporate income taxed at a flat rate of 21%.
- Corporate Alternative Minimum Tax repealed.
- Five-year carry back of net operating losses allowed for losses arising in 2018, 2019, 2020.
Deductions Repealed- Business Entertainment Expenses
- Employment Tax Rates
Employer Tax Rate Wage Base Social Security 6.20% $142,800 Medicare +1.45% No Limit =7.65% Employee Tax Rate Wage Base Social Security 6.20% $142,800 Medicare +1.45% No Limit =7.65% Self Employed Tax Rate Wage Base Social Security 12.40% $142,800 Medicare +2.90% No Limit =15.30% *Additional 0.9% Medicare tax is imposed on individuals who receive wages or self-employment income in excess of $200,000 ($250,000 for joint return, $125,000 for married filing separate).
- Depreciation/Amortization
3 – Year Assets (200% DB) Dies, molds, small tools
3 – Year Assets (Straight-line) Computer software (if separately stated from hardware)
5 – Year Assets (200% DB) Autos, light-/heavy-duty trucks, computers, typewriters, copiers, medical equipment, construction equipment, wholesale/retail equipment, private aircraft, some manufacturing equipment
7 – Year Assets (200% DB) Most manufacturing equipment, office furniture, printing equipment
15 – Year Assets (Straight-line) Intangible assets including goodwill, going concern value and covenants not to compete. Qualified improvement property
27.5 – Year Assets (Straight-line) Rental houses, apartments, low-income housing
39 – Year Assets (Straight-line) Commercial and industrial buildings, office buildings, shopping centers, warehouses, manufacturing facilities
Annual RecoveryPercent of Original Depreciable Basis Under 200% DB Method
Recovery Year 1 2 3 4 5 6 7 8 Class 3 Year 33.33 44.45 14.81 7.41 5 Year 20.00 32.00 19.20 11.52 11.52 5.76 7 Year 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46 Section 179 Expense DeductionSmall Business taxpayers may elect to expense $1,050,000 million of certain new or used qualifying depreciable property placed in service in tax year 2021. Deduction is phased-out if the cost of qualifying property placed in service during the year exceeds $2.62 million.
Special (Bonus) Depreciation AllowanceBonus depreciation allowance can be claimed for qualified property placed in service:
- 100% for 2018 through 2022
- 80% for 2023
- 60% for 2024
- 40% for 2025
- 20% for 2026
2021 Standard Mileage DeductionsUse:
- Business, $0.56 per mile
- Charitable, $0.14 per mile
- Medical or moving purposes for qualified active duty members of the Armed Forces, $0.16 per mile
- Retirement Plan LimitsIndividual Limitations
Under Age 50 Age 50 & Up IRA $6,000 (a) $7,000 (a) Roth IRA $6,000 (b) $7,000 (b) 401(k)/SARSEP Salary Deferrals $19,500 $26,000 Simple Plans $13,500 $16,500 PROFIT SHARING PLANS
Corporate, 100% up to $58,000 (c)
SEP – self-employed, 20% up to $58,000 (d)
SEP – employee……………………….25% up to $57,000
(a) Phaseout for deducting IRA contributions (qualified plan participants):
Joint: $105,000 – $125,000 AGI
Single or HOH: $66,000 – $76,000 AGI(b) Phaseout of Roth contribution eligibility:
Joint: $198,000 – $208,000 AGI
Single or HOH: $125,000 – $140,000 AGI(c) Overall plan is limited to 25% of total compensation of all eligible employees (capped at $285k per employee).
(d) Of net self-employed income after 1/2 self-employment tax deduction (capped at $290k per employee).
- Social Security Benefits
Minimum earned income limit:
Annual Monthly Ages 62-65 years $18,960 $1,580 Months before individual reaches age 66 $50,520 $4,210 Months after age 66 No Limit No Limit - Taxable Social Security
Social Security received is taxable if AGI, plus tax-exempt interest, plus one-half of Social Security received, exceeds these base amounts:
The taxable amount is the lesser of:
a. Percent of the excess over the base amount, or
b. 85% of benefit receivedBase Amount For 50% Over Base 85% Over Base Married Filing Jointly $32,001-$44,000 $44,001+ Single/Head of Household $25,001-$34,000 $34,001+ Married Filing Separately $0 $0