2021 Tax Updates

Tax Rates

Individual

Unmarried Individuals (other than surviving spouses and heads of households)

Taxable Income
2021 Tax

Not over $9,950

10% of taxable income

Over $9,950 but not over
$40,525

$995 plus 12% of the amount over $9,950

Over $40,525 but not over
$86,375

$4,664 plus 22% of the amount over $40,525

Over $86,375 but not over
$164,925

$14,751 plus 24% of the amount over $86,375

Over $164,925 but not over
$209,425

$33,603 plus 32% of the amount over $164,925

Over $209,425 not over
$523,600

$47,843 plus 35% of the amount over $209,425

Over $523,600

$157,804.25 plus 37% of the amount over $523,600

Married Individuals Filing Joint Returns, & Surviving Spouses

Taxable Income
2021 Tax

Not over $19,900

10% of taxable income

Over $19,900 but not over
$81,050

$1,990 plus 12% of the amount over $19,900

Over $81,050 but not over
$172,750

$9,328 plus 22% of the amount over $81,050

Over $172,750 but not over
$329,850

$29,502 plus 24% of the amount over $172,750

Over $329,850 but not over
$418,850

$67,206 plus 32% of the amount over $329,850

Over $418,850 but not over
$628,300

$95,686 plus 35% of the amount over $418,850

Over $628,300

$168,993.50 plus 37% of the amount over $628,300

Married Individuals Filing Separate Returns

Taxable Income
2021 Tax

Not over $9,950

10% of taxable income

Over $9,950 but not over
$40,525

$995 plus 12% of the amount over $9,950

Over $40,525 but not over
$86,375

$4,664 plus 22% of the amount over $40,525

Over $86,375 but not over
$164,925

$14,751 plus 24% of the amount over $86,375

Over $164,925 but not over
$209,425

$33,603 plus 32% of the amount over $164,925

Over $209,425 not over
$314,150

$47,843 plus 35% of the amount over $209,425

Over $314,150

$84,496.75 plus 37% of the amount over $314,150

Heads of Households

Taxable Income
2021 Tax

Not over $14,200

10% of taxable income

Over $14,200 but not over
$54,200

$1,420 plus 12% of the amount over $14,200

Over $54,200 but not over
$86,350

$6,220 plus 22% of the amount over $54,200

Over $86,350 but not over
$164,900

$13,293 plus 24% of the amount over $86,350

Over $164,900 but not over
$209,400

$32,145 plus 32% of the amount over $164,900

Over $209,400 not over
$523,600

$46,385 plus 35% of the amount over $209,400

Over $523,600

$156,355 plus 37% of the amount over $523,600

2021 C Corporation Tax Rates

Taxable Income

2021 Tax

Any Amount of Income

21%

2021 Estates & Trusts Tax Rates

Taxable Income

2021 Tax

Not over $2,650

10% of taxable income

Over $2,650 but not over
$9,550

$265 plus 24% of the excess over $2,650

Over $9,550 but not over
$13,050

$1,921 plus 35% of excess over $9,550

Over $13,050

$3,146 plus 37% of the excess over $13,050

Social Security & Medicare

Self-Employed

Employee

SS Tax Rate

12.4%

6.2%

Max Wages Subject to SS

$154,629*

$142,800

Med. Tax Rate

2.9%

1.45%

Additional Medicare Tax of 0.9%

Married Filing Joint – MAGI > $250,000
Married Filing Separate – > $125,000
Others – > $200,00

*The reason for the higher number is that only 92.35% of your net profits are taxed at 12.4%, and the $142,800 threshold is after application of the 92.35%.

2021 Capital Gain Rates

Capital Asset

Holding Period

Tax Rate

Short-term capital gains.

One year or less.

Ordinary income tax rates, up to 37%.

Long-term capital gains.

More than one year.

Taxpayers with income below the 15% rate threshold below, pay 0%.
The following are the income thresholds for 15% and 20% rates.

Married Filing Jointly:
15% Rate – $80,801 – $501,600
20% Rate – over
$501,600

Married Filing Separately:
15% Rate – $40,401 – $250,800
20% Rate – over
$250,800

Head of Household:
15% Rate – $54,101 – $473,750
20% Rate – over
$473,750

Unmarried Individuals:
15% Rate – $40,401 – $445,850
20% Rate – over
$445,850

Collectibles.

More than one year.

28%

Section 1202 qualified small business stock.

More than
five years.

28%

Unrecaptured §1250 Gain, (gains on real property attributable to straight-line depreciation).

More than one year.

25%

Personal Deduction

2021 Standard Deduction

Filing Status

Standard Deduction

Unmarried Individuals

$12,550

Married Individuals Filing Separate Returns

$12,550

Heads of Households

$18,800

Married Individuals Filing Joint Returns & Surviving Spouses

$25,100

Dependents

$12,550

Vehicles

2021 Standard Mileage Rates

IRS Mileage Rate (in cents per mile)

Business

56.0

Charitable

14.0

Medical & Moving

16.0

Depreciation

26.0

2021 Personal Exemptions

Per Individual

No Longer Applicable

DEPRECIATION LIMITS FOR PASSENGER VEHICLES PLACED IN SERVICE IN 2020

*Note that the 2021 limits will be released later in 2021

With Bonus Depreciation

No Bonus Depreciation

Tax Year

Amount

Amount

1st Tax Year

$18,100

$10,100

2nd Tax Year

$16,100

$16,100

3rd Tax Year

$9,700

$9,700

Each Succeeding Year

$5,760

$5,760

Retirement Plans 2021

IRA contribution (under age 50)

$6,000

IRA contribution (50 and older)

$7,000

IRA deductibility phase-out (based on MAGI)

Participants in employer plans

Single or Head of Household

$66,000 – $76,000

Married, filing jointly

$105,000 – $125,000

Married, filing separately

$0 – $10,000

Nonparticipants in employer plans

Nonparticipant married to a participant

$198,000 – $208,000

Neither spouse a participant

Fully deductible

Phase out of Roth IRA contribution eligibility

Single

$125,000 – $140,000

Married, filing jointly

$198,000 – $208,000

Retirement Plan

Max Employee Contribution

Max Employer Contribution

SEP

N/A

25% of wages or 20% of net self- employment income,
max of $58,000

SIMPLE IRA

$13,500*

N/A

401(k)

$19,500**

25% of wages***

*$16,500 if 50 or older
**$26,000 if 50 or older
***Combined maximum of employee and employer contributions is $58,000 in 20212,800 threshold is after application of the 92.35%.