Here's a quick review of some of the tax changes you'll see from 2020 to 2021 as a result of inflation adjustments and new tax laws.
Provision | 2021 | 2020 | +/- |
Business equipment Sec. 179 expensing deduction | $1,050,000 | $1,040,000 | +$10,000 |
Total purchase limit for full Sec. 179 expensing deduction | $2,620,000 | $2,590,000 | +$30,000 |
Standard mileage rate: business | 56¢ per mile | 57.5¢ per mile | -1.5¢ |
Standard mileage rate: medical/moving | 16¢ per mile | 17¢ per mile | -1.0¢ |
Mileage rate: charitable activity | 14¢ per mile | 14¢ per mile | nc |
Maximum wages subject to social security tax | $142,800 | $137,700 | +$5,100 |
Social security earnings limit | |||
- Under full retirement age | $18,960 | $18,240 | +$720 |
- Full retirement age | No limit | No limit | nc |
Top estate tax rate | 40% | 40% | nc |
Estate tax exemption | $11,700,000 | $11,580,000 | +$120,000 |
Annual gift tax exclusion (per donee) | $15,000 | $15,000 | nc |
Alternative minimum tax exemption | |||
- Single | $73,600 | $72,900 | +$700 |
- Married, joint | $114,600 | $113,400 | +$1,200 |
- Married, separate | $57,300 | $56,700 | +$600 |
Maximum retirement plan contributions | |||
- IRA for those under age 50 | $6,000 | $6,000 | nc |
- IRA for those 50 and over | $7,000 | $7,000 | nc |
- SIMPLE plan for those under age 50 | $13,500 | $13,500 | nc |
- SIMPLE plan for those 50 and over | $16,500 | $16,500 | nc |
- 401(k) plan for those under age 50 | $19,500 | $19,500 | nc |
- 401(k) plan for those 50 and over | $26,000 | $26,000 | nc |
HSA contribution limits | |||
- Self only | $3,600 | $3,550 | +$50 |
- Family | $7,200 | $7,100 | +$100 |
- Additional for 55 & older | $1,000 | $1,000 | nc |
"Kiddie tax" threshold | $2,200 | $2,200 | nc |
"Nanny tax" threshold | $2,200 | $2,200 | nc |
Education savings account contribution (Coverdell) | $2,000 | $2,000 | nc |
American opportunity (Hope) credit limit | $2,500 | $2,500 | nc |
Education loan interest deduction | $2,500 | $2,500 | nc |
Personal exemption (suspended through 2025) | Suspended | Suspended | na |
FICA & self-employment tax | |||
Taxable wages for Social Security/Medicare | Up to $142,800 | Up to $137,700 | +$5,100 |
Social Security/Medicare tax rate | |||
- Employees | 7.65% | 7.65% | nc |
- Employers | 7.65% | 7.65% | nc |
- Self-employed | 15.3% | 15.3% | nc |
Standard deduction | |||
- Single | $12,550 | $12,400 | +$150 |
- Joint returns & surviving spouses | $25,100 | $24,800 | +$300 |
- Married filing separately | $12,550 | $12,400 | +$150 |
- Head of household | $18,800 | $18,650 | +$150 |
- Additional for elderly or blind (married) | $1,350 | $1,300 | +$50 |
- Additional for elderly or blind (single) | $1,700 | $1,650 | +$50 |