2021 Tax Update

Tax rates change annually. These are the updates for 2021.

2021 income tax brackets

For unmarried individuals, taxable income over….

$1 10%
$9,950 12%
$40,525 22%
$86,375 24%
$164,925 32%
$209,425 35%
$523,600 37%

For married individuals filing joint returns, taxable income over…

$1 10%
$19,900 12%
$81,050 22%
$172,750 24%
$329,850 32%
$418,850 35%
$628,300 37%

For heads of households, taxable income over…

$1 10%
$14,200 12%
$54,200 22%
$86,350 24%
$164,900 32%
$209,400 35%
$523,600 37%

2021 Long-term capital gains rates

For unmarried individuals, taxable income over…

$1 0%
$40,400 15%
$200,000 18.8%*
$445,850 23.8%*

*Includes 3.8% net investment income tax

For married individuals filing joint returns, taxable income over…

$1 0%
$80,000 15%
$250,000 18.8%*
$501,600 23.8%*

*Includes 3.8% net investment income tax

$1 0%
$54,100 %15
$200,000 18.8%*
$473,750 23.8%*

*Includes 3.8% net investment income tax

2021 IRA contribution limits

Under age 50 $6,000
Age 50 or over $7,000

Traditional and Roth IRA contribution limits

Depending upon whether or not you and your spouse have a retirement plan at work, your IRA contribution may not be tax deductible and a Roth contribution might not be possible. See hereafter.

2021 Traditional IRA deductible contribution income limits

Covered by a plan at work…

Single or Head of Household… ….and your Modified AGI is… …then you can take…
$66,000 or less full deduction
in between partial deduction
$76,000 or more no deduction
Married filing jointly or qualifying widower… …and your Modified AGI is… …then you can take…
$105,000 or less partial deduction
in between partial deduction
$125,000 or more no deduction

Follow this chart if you do have a retirement plan at work

Not covered by a plan at work…

Single, Head of Household or Qualifying Widower Regardless of your income… …you can take a full deduction
Married with a spouse who does not have a plan at work Regardless of your income… …you can take a full deduction
Married with a spouse who does have a plan at work … …and your Modified AGI is… …then you can take…
$198,000 or less full deduction
in between partial deduction
$208,000 or more no deduction

Follow this chart if you don’t have a retirement plan at work

2021 Roth IRA contribution income limits

Roth IRA contributions, but not Roth conversions, are limited by income.

2020 income Single Married Filing Jointly
May make a full Roth contribution $125,000 or less $198,000 or less
Contribution gradually reduced in between in between
Not eligible $140,000 or more $208,000 or more

Maximum income for Roth contributions

2021 SEP and Simple IRA contribution limits

SEP IRAs and Simple IRAs allow larger contributions than IRAs, but as discussed in the book, require rules to be followed.

SEP $58,000
Simple $13,500

The Simple IRA allows another $3,000 contribution if you are over age 50.

2021 401k contribution limits

Employee $19,500
Max including employer $58,000
If you are over age 50, add the “catch up” amount $6,500
Highly-compensated employee, income above $130,000

Over age 50? Max employer and employee is $64,500.

2021 estate tax exemption

Unmarried individuals $11.7 million
Married couples $23.4 million

2021 Social Security and Medicare Taxes

These are also called FICA taxes, or payroll taxes.

Maximum earnings subject to Social Security Tax (OASDI): $142,800
OASDI tax rate 12.4%
Max earnings subject to Medicare tax no cap
Medicare tax rate 2.9%

Self-employed people pay all of it: 15.3%. Or, for employees, they pay half, employers pay half.

2021 HSA, HRA and FSA

Health savings accounts, health reimbursement accounts and flexible spending accounts; here are the contribution limits for 2021.

HSA annual contribution individual $3,600
HSA annual contribution family $7,200
HSA over age 55 catch-up $1,000
QSEHRA annual contribution limit individual $5,300
QSEHRA annual contribution limit family $10,700
FSA contribution limit $2,750
Dependent care FSA contribution limit $5,000

Go Tax Free

Get the Book

Order a print or Kindle version on Amazon

Talk with an Expert

Our wealth management approach may be different from experiences you have had with other advisors.

Contact Us

Attend an upcoming event

We offer a broad array of events that broaden our knowledge and experiences.

View All Events

Recent Blog Post

Read this Periscope to learn what today’s politics might mean for our investments and also to get the short, (and long if you like), version of our investment and economic commentary.

Read More