The IRS recently published the annual inflation updates for 2021. If you have questions about a particular amount that I do not mention here, you can likely find it in the official IRS announcements:
- Rev. Proc. 2020-45 contains most inflation adjustment figures, and
- Notice 2020-79 contains figures relating to retirement accounts.
Single 2021 Tax Brackets
| Taxable Income |
Tax Bracket: |
| $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% |
Married Filing Jointly 2021 Tax Brackets
| Taxable Income |
Tax Bracket: |
| $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% |
Head of Household 2021 Tax Brackets
| Taxable Income |
Tax Bracket: |
| $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% |
Married Filing Separately 2021 Tax Brackets
| Taxable Income |
Marginal Tax Rate: |
| $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-$314,150 | 35% |
| $314,150+ | 37% |
Standard Deduction Amounts
The 2021 standard deduction amounts are as follows:
- Single or married filing separately: $12,550
- Married filing jointly: $25,100
- Head of household: $18,800
The additional standard deduction for people who have reached age 65 (or who are blind) is $1,350 for each married taxpayer or $1,700 for unmarried taxpayers.
IRA Contribution Limits
The contribution limit for Roth IRA and traditional IRA accounts is unchanged at $6,000.
The catch-up contribution limit for people age 50 or over does not get inflation adjustments and therefore is still $1,000.
401(k), 403(b), 457(b) Contribution Limits
The salary deferral limit for 401(k) and other similar plans is unchanged at $19,500.
The catch-up contribution limit for 401(k) and other similar plans for people age 50 and over is unchanged at $6,500.
The maximum possible contribution for defined contribution plans (e.g., for a self-employed person with a sufficiently high income contributing to a solo 401(k)) is increased to $58,000.
Child Tax Credit
The child tax credit ($2,000 per child) and the related phaseout threshold ($200,000 of modified adjusted gross income, $400,000 if married filing jointly) do not get inflation adjustments. The portion of the credit that can be refundable (up to $1,400 per child) does receive inflation adjustments, but it is still $1,400 for 2021.
Capital Gains and Qualified Dividends
For 2021, long-term capital gains and qualified dividends face the following tax rates:
- 0% tax rate if they fall below $80,800 of taxable income if married filing jointly, $54,100 if head of household, or $40,400 if filing as single or married filing separately.
- 15% tax rate if they fall above the 0% threshold but below $501,600 if married filing jointly, $473,750 if head of household, $445,850 if single, or $250,800 if married filing separately.
- 20% tax rate if they fall above the 15% threshold.
Alternative Minimum Tax (AMT)
The AMT exemption amount is increased to:
- $73,600 for single people and people filing as head of household,
- $114,600 for married people filing jointly, and
- $57,300 for married people filing separately.
Estate Tax
The estate tax exclusion is increased to $11,700,000 per decedent.
Pass-Through Business Income
With respect to the 20% deduction for qualified pass-through income, for 2021, the threshold amount at which the “specified service trade or business” phaseout and the wage (or wage+property) limitations begin to kick in will be $329,800 for married taxpayers filing jointly, $164,900 for single taxpayers and people filing as head of household, or $164,925 for married people filing separately.
Hi. I'm Mike Piper, the author of this blog. I'm 
