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 |
* Incurred in restaurants. This is part of the Consolidated Appropriations Act, signed into law on December 27, 2020.