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01.19.21

Numbers, numbers, numbers — 2021

BY Deborah L. Anderson

The following list contains some of the “number” changes (many based on mandated inflation adjustments) that you might find interesting and helpful for 2021 tax and estate planning (with 2020 comparative numbers). Many of the tax law changes within the Tax Cuts and Jobs Act are temporary as they sunset after a specific date. Refer to the applicable endnotes within the list for such dates.

Federal Income Tax Items 2020 2021
Top federal marginal tax rate for ordinary income (applicable for taxable income over $622,050 joint and $518,400 single in 2020 and $628,300 joint and $523,600 single in 2021* 37% 37%
Federal tax rate for long-term capital gains (assets held for more than one year) and qualified dividends for individuals with taxable income of up to $80,000 joint and $40,000 single in 2020 and $80,800 joint and $40,400 single in 2021* 0% 0%
Federal tax rate for long-term capital gains (assets held for more than one year) and qualified dividends for individuals with taxable income between $80,001 and $496,600 joint and $40,001 and $441,450 single in 2020 and between $80,800 and $501,600 joint and $40,400 and $445,850 single in 2021* 15% 15%
Federal tax rate for long-term capital gains (assets held for more than one year) and qualified dividends for individuals with taxable income over $496,601 joint and $441,451 single in 2020 and over $501,600 joint and $445,850 single in 2021* 20% 20%
Federal tax rate on the portion of long-term gain from real estate that represents depreciation recapture (so-called “Section 1250 gain”) 25% 25%
Federal tax rate on long-term gain from collectibles (e.g., art, antiques, precious metals, gems, stamps, coins, etc.) 28% 28%
Standard deduction*    
Married filing jointly $24,800 $25,100
Head of household $18,650 $18,800
Single or married filing separate returns $12,400 $12,550
Additional amount for over 65 or blind:    
Married filing jointly $1,300 $1,350
Single $1,650 $1,700
Maximum state and local income and real estate taxes deductible on Schedule A* $10,000 $10,000
Maximum miscellaneous itemized deductions (subject to the 2% AGI floor) deductible on Schedule A* $0 $0
Maximum acquisition indebtedness threshold for Schedule A mortgage interest deduction on debt incurred on or before December 15, 2017 $1,000,000 $1,000,000
Maximum acquisition indebtedness threshold for Schedule A mortgage interest deduction on debt incurred after December 15, 2017* $750,000 $750,000
Maximum home equity indebtedness threshold for Schedule A mortgage interest deduction* $0 $0
Applicable amount of AGI after which itemized deductions are reduced by 3% of AGI over this applicable amount—the “Pease Limitation”*    
Married filing jointly $0 $0
Head of household $0 $0
Single $0 $0
Married filing separately $0 $0
Maximum allowed tax-free distribution from 529 Plan for elementary and secondary school tuition and for payments toward qualified education loans (per beneficiary)

Note: The SECURE Act expanded the definition of qualified higher education expenses eligible for payment from 529 Plans to include costs of fees, textbooks, supplies, and equipment required for apprenticeship programs
$10,000 $10,000
Child Tax Credit allowed for each qualifying child under the age of 17* $2,000 $2,000
Child Tax Credit allowed for each dependent other than a qualifying child* $500 $350
Modified AGI phase-out threshold for Child Tax Credit*    
Married filing jointly $400,000 $400,000
Single $200,000 $200,000
Married filing separately $200,000 $200,000
Net unearned income of children under age 18 and dependent full-time students under age 24 that escapes the “kiddie” tax (child taxed at parent’s marginal rate) $2,200 $2,200
Minimum standard deduction for individual who can be claimed as a dependent $1,050 $1,100
Personal exemption amount (subject to “phase-out,” as noted below)* $0 $0
Range of Adjusted Gross Income (AGI) where the personal exemption “phases out”*    
Married filing jointly $0 $0
Head of household $0 $0
Single $0 $0
Married filing separately $0 $0
Taxable wage base for Social Security and self-employment income $137,700 $142,800
Social Security COLA (cost-of-living adjustment) 1.6% 1.3%
Additional Medicare tax on wages and self-employment income when wages and self-employment income exceed the following thresholds:    
Married filing jointly—$250,000 0.9% 0.9%
Married filing separately—$125,000    
Single/Head of household—$200,000    
Medicare surtax on investment income when Modified Adjusted Gross Income (MAGI) (which is AGI plus foreign earned income) exceeds the following thresholds:    
Married filing jointly—$250,000 3.8% 3.8%
Married filing separately—$125,000    
Single/Head of household—$200,000    
Tax is assessed on the smaller of the filer’s net investment income or the excess of MAGI over the applicable threshold amount    
Maximum alternative minimum tax (AMT) rate on AMT income over $197,900 in 2020 and $199,900 in 2021; below these amounts, the AMT rate is 26% 28% 28%
Alternative minimum tax (AMT) exemption:*    
Married filing jointly $113,400 $114,600
Single $72,900 $73,600
Married filing separately $56,700 $57,300
Range of AMT taxable income where the AMT exemption “phases out”*    
Married filing jointly $1,036,800–1,490,400 $1,047,200 –1,505,600
Single $518,400–810,000 $523,600 –818,000
Married filing separately $518,400–745,200 $523,600 –752,800
Health Savings Account (HSA) annual contribution:    
Family $7,100 $7,200
Single $3,550 $3,600
Additional “catch-up” contributions for individuals aged 55 or older $1,000 $1,000
Maximum traditional and Roth IRA contributions $6,000 $6,000
Additional “catch-up” contributions for individuals aged 50 or older $1,000 $1,000
AGI phase-out range for Roth IRA contributions    
Married filing jointly $196,000–$206,000 $198,000–$208,000
Single/Head of household $124,000–$139,000 $125,000–$140,000
Maximum elective deferrals for 401(k) plans, 403(b) plans, governmental 457 plans, and SARSEPs $19,500 $19,500
Additional catch-up contributions for above plans for those aged 50 or older $6,500 $6,500
Maximum deferral for SIMPLE plans $13,500 $13,500
Additional catch-up contributions for SIMPLE plans for those aged 50 or older $3,000 $3,000
Maximum deferral for non-governmental 457 plans (catch-up contribution is not allowed) $19,500 $19,500
Maximum compensation limit for defined contribution retirement plan purposes $285,000 $290,000
Maximum contribution limit for defined contribution plans $57,000 $58,000
Defined benefit plan limit $230,000 $230,000
Maximum Qualified Charitable Distribution (QCD, or a taxable distribution from an IRA owned by an individual over 70½ that is paid directly from the IRA to a qualified charity. QCD amount may be excluded from income and also may be used to satisfy the Required Minimum Distribution amount. QCD is not taken into account in determining any deduction for charitable contributions) $100,000 $100,000
Maximum foreign earned income exclusion $107,600 $108,700
Business mileage rate (per mile) $0.575 $0.56
Charitable mileage rate (per mile) $0.14 $0.14
Medical and moving mileage rate (per mile) $0.17 $0.16
AGI threshold for deducting qualified medical expenses 7.5% 7.5%
Estimated tax payments and withholding required to avoid penalties:    
Percentage of current year tax liability or 90% 90%
Percentage of prior year tax liability:    
if AGI is $150,000 or less 100% 100%
if AGI is greater than $150,000 110% 110%
Amount of compensation that triggers withholding and FICA responsibility for domestic employees (“nanny tax”) $2,200 $2,200
Maximum amount of Section 179 property that can be immediately expensed $1,040,000 $1,050,000
Maximum amount of additional first-year depreciation (“Bonus Depreciation") applied to the adjusted basis of qualified property placed in service after September 27, 2017, and before January 1, 2023* 100% 100%
Medicare Part B monthly premium—2021 premiums will be based on modified adjusted gross income as follows:    
Less than or equal to $88,000 (single) or $176,000 (joint)—monthly premium $144.60 $148.50
$88,001–$111,000 (single) or $176,001–$222,000 (joint)—monthly premium $202.40 $207.90
$111,001–$138,000 (single) or $222,001–$276,000 (joint)—monthly premium $289.20 $297.00
$138,001–$165,000 (single) or $276,001–$330,000 (joint)—monthly premium $376.00 $386.10
$165,001–$500,000 (single) or $330,001–$750,000 (joint)—monthly premium $462.70 $475.20
More than $500,000 (single) or greater than $750,000 (joint)—monthly premium $491.60 $504.90
Federal Transfer Tax Items 2020 2021
Top estate tax rate 40% 40%
Top gift tax rate 40% 40%
Top generation-skipping tax (GST) rate 40% 40%
Annual gift tax exclusion per donee

The gift tax exclusion per donee is subject to an inflation adjustment, which has been determined for 2020 and 2021
$15,000 $15,000
Applicable lifetime gift tax exemption

The 2020 lifetime gift tax exemption is made up of $10,000,000 of basic exclusion and $1,580,000 of inflation adjustment. For 2021, the basic exclusion is $10,000,000 and $1,700,000 of inflation adjustment*
$11,580,000 $11,700,000
Applicable estate tax exemption

The 2020 lifetime gift tax exemption is made up of $10,000,000 of basic exclusion and $1,580,000 of inflation adjustment. For 2021, the basic exclusion is $10,000,000 and $1,700,000 of inflation adjustment*

The exemption amount does not reflect “portability,” which is the ability of a surviving spouse to utilize the unused estate exemption of a spouse who died in or after 2011
$11,580,000 $11,700,000
Applicable generation-skipping tax (GST) exemption

The 2020 lifetime gift tax exemption is made up of $10,000,000 of basic exclusion and $1,580,000 of inflation adjustment. For 2020, the basic exclusion is $10,000,000 and $1,700,000 of inflation adjustment*
$11,580,000 $11,700,000
Transfers to a spouse during life or at death (U.S. citizens) Unlimited Unlimited
Annual gift tax exclusion for transfer to non-citizen spouse

The 2020 annual gift tax exclusion for transfers to a non-citizen spouse is made up of $100,000 of basic exclusion and $57,000 of inflation adjustment. For 2021, the basic exclusion is $100,000 and $59,000 of inflation adjustment
$157,000 $159,000
Reporting threshold for gifts received from foreign corporations and partnerships

The 2020 reporting threshold for gifts received from foreign corporations and partnerships is made up of $10,000 of basic exclusion and $6,649 of inflation adjustment. For 2021, the basic exclusion is $10,000 and $6,815 of inflation adjustment
$16,649 $16,815
Reporting threshold for gifts received from non-resident aliens and foreign estates $100,000 $100,000
California Tax Items 2020 2021
Top California marginal income tax rate for filers with taxable income of $1,000,000 or more. 12.3% rate applies to filers with taxable income below $999,999 13.3% 13.3%
Top California estate tax rate—there is no California estate or inheritance tax N/A N/A
Top California gift tax rate—there is no state gift tax N/A N/A
Florida Tax Items 2020 2021
Top Florida marginal income tax rate N/A N/A
Top intangible tax rate (per value of intangible assets owned on January 1). The tax was $0 effective January 1, 2007 N/A N/A
Top Florida estate tax rate—there is no Florida estate or inheritance tax N/A N/A
Top Florida gift tax rate—there is no state gift tax N/A N/A
Illinois Tax Items 2020 2021
Top Illinois marginal income tax rate 4.95% 4.95%
Top Illinois estate tax rate 16% 16%
Estate tax exemption $4,000,000 $4,000,000
Top Illinois gift tax rate—there is no state gift tax N/A N/A
Maryland Tax Items 2020 2021
Top Maryland marginal income tax rate 5.75%  5.75%
Top local income tax rate (Baltimore City and counties of Howard, Wicomico, Montgomery, Somerset, Queen Anne’s, and Prince George’s) 3.2% 3.2%
Top Maryland estate tax rate (inheritance tax rate is 10% with no exemption amount) 16% 16%
Estate tax exemption $5,000,000 $5,000,000
Top Maryland gift tax rate—there is no state gift tax N/A N/A
Massachusetts Tax Items 2020 2021
Massachusetts income tax rates:    
Parts A, B, and C income (excluding short-term gains) and collectibles 5% 5% (est)
Part A income—net short-term gain and gain on all collectibles 12% 12%
Top Massachusetts estate tax rate 16% 16%
Estate tax exemption $1,000,000 $1,000,000
Top Massachusetts gift tax rate—there is no state gift tax N/A N/A
New Hampshire Tax Items 2020 2021
Interest and dividend income tax rate for residents 5% 5%
Top marginal income tax rate on other income N/A N/A
Top New Hampshire estate tax rate—there is no New Hampshire estate or inheritance tax N/A N/A
Top New Hampshire gift tax rate—there is no state gift tax N/A N/A
New York State Tax Items 2020 2021
Top New York State marginal income tax rate for joint filers with taxable income in excess of $2,155,350 8.82% 8.82%
Top New York City marginal income tax rate 3.876% 3.876%
Top New York estate tax (if estate just 5% more than exemption, there is a “cliff” taxing on full value of estate, not just the amount over exemption) 16% 16%
Estate tax exemption $5,850,000 $5,930,000
Top New York gift tax rate—there is no state gift tax. Estates of decedents dying on or after January 16, 2019, and before January 1, 2026, will need to add back any taxable gift made during the preceding three-year period ending on the decedent’s date of death. This does not apply to non-residents of NYS or to gifts of real or tangible personal property having an actual situs outside NYS at the time of the gift. Gifts made between January 1, 2019, and January 15, 2019, are not included in the add back. N/A N/A
Rhode Island Tax Items 2020 2021
Top Rhode Island marginal income tax rate 5.99% 5.99%
Top Rhode Island estate tax rate 16% 16%
Estate tax exemption $1,579,922 $1,595,156
Top Rhode Island gift tax rate—there is no state gift tax N/A N/A
Virginia Tax Items 2020 2021
Top Virginia marginal income tax rate 5.75% 5.75%
Top Virginia estate tax rate—there is no Virginia estate or inheritance tax N/As N/A
Top Virginia gift tax rate—there is no state gift tax N/A N/A

*With some exceptions, the bonus depreciation deduction begins to phase-down in tax years beginning on or after January 1, 2023, and is eliminated for tax years beginning on or after January 1, 2027.

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Deborah L. Anderson

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