2021 Inflation Adjustments for Individual Taxpayers
Posted on Wednesday, November 04, 2020
ShareThe IRS has released the annual inflation adjustments that affect individuall taxpayers. Because inflation has been low, the changes are very minimal.
The standard deduction increases from $12,400 to $12,550 for single taxpayers and increases from $24,800 to $25,100 for joint taxpayers. The additional deduction for those 65 or blind remains at $1,350 for joint filers and $1,700 for singles.
2021 marginal tax rates remain the same, although the brackets increased slightly for inflation.
Contributions to health flexible spending arrangements remain capped at $2,750. The maximum amount that can be contributed to health savings accounts (HSAs) increases to $7,200 for a family plan and $3,600 for single plans, with a $1,000 catch up for those 55 or over.
Social Security contributors will see those limits go up as well. The Social Security wage base increases from $137,700 to $142,800. For those under full retirement age who are receiving benefits and still working, the annual earned income ceiling increases from $18,240 to $18,960. Benefits will increase by 1.3%.
The annual gift tax exclusion remains at $15,000 for 2021, while estate or decedents who die in 2021 have a new basic exclusion amount of $11,700,000, up from $11,580,000.
If you want more detail, you can review IRS Revenue Procedure 2020-45 or contact your DWD accountant.
Posted in Tax Topics For Individuals
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