{"id":23819,"date":"2021-09-24T08:00:17","date_gmt":"2021-09-24T13:00:17","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=23819"},"modified":"2021-09-24T07:53:02","modified_gmt":"2021-09-24T12:53:02","slug":"irs-annual-inflation-adjustments-for-tax-years-2020-and-2021","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/irs-annual-inflation-adjustments-for-tax-years-2020-and-2021\/","title":{"rendered":"IRS annual inflation adjustments for tax years 2020 and 2021"},"content":{"rendered":"

This chart outlines the year-over-year inflation adjustments on some higher impact provisions of the tax code. You can refer to these figures in planning for tax year 2021, and consider sharing with your individual and business tax clients. In addition, refer to the resources at the bottom of the article for additional adjustments.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/th>\nTax year 2020<\/span><\/th>\nTax year 2021<\/span><\/th>\n<\/tr>\n
Standard deduction<\/strong><\/td>\n\n
    \n
  • Married filing jointly: $24,800<\/li>\n
  • Single taxpayers and married individuals filing separately: $12,400<\/li>\n
  • Heads of household: $18,650<\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • Married filing jointly: $25,100<\/li>\n
  • Single taxpayers and married individuals filing separately: $12,550<\/li>\n
  • Heads of household: $18,800<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Personal exemption<\/strong><\/td>\n$0<\/td>\n$0<\/td>\n<\/tr>\n
Tax rates and brackets<\/strong><\/td>\n\n
    \n
  • Top rate is 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly)<\/li>\n
  • 35% for incomes over $207,350 ($414,700 for married couples filing jointly)<\/li>\n
  • 32% for incomes over $163,300 ($326,600 for married couples filing jointly)<\/li>\n
  • 24% for incomes over $85,525 ($171,050 for married couples filing jointly)<\/li>\n
  • 22% for incomes over $40,125 ($80,250 for married couples filing jointly)<\/li>\n
  • 12% for incomes over $9,875 ($19,750 for married couples filing jointly)<\/li>\n
  • Lowest rate is 10% for incomes of single individuals with incomes of $9,875 or less ($19,750 for married couples filing jointly)<\/span><\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • Top rate is 37% for individual single taxpayers with incomes greater than $523,600 ($628,300 for married couples filing jointly)<\/li>\n
  • 35% for incomes over $209,425 ($418,850 for married couples filing jointly)<\/li>\n
  • 32% for incomes over $164,925 ($329,850 for married couples filing jointly)<\/li>\n
  • 24% for incomes over $86,375 ($172,750 for married couples filing jointly)<\/li>\n
  • 22% for incomes over $40,525 ($81,050 for married couples filing jointly)<\/li>\n
  • 12% for incomes over $9,950 ($19,900 for married couples filing jointly)<\/li>\n
  • Lowest rate is 10% for incomes of single individuals with incomes of $9,950 or less ($19,900 for married couples filing jointly)<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Alternative minimum tax exemption<\/strong><\/td>\n\n
    \n
  • $72,900, and begins to phase out at $518,400<\/li>\n
  • $113,400 for married couples filing jointly, and begins to phase out at $1,036,800<\/span><\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • $73,600, and begins to phase out at $523,600<\/li>\n
  • $114,600 for married couples filing jointly, and begins to phase out at $1,047,200<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Penalty for not maintaining minimum essential health coverage<\/b><\/td>\n$0<\/td>\n$0<\/td>\n<\/tr>\n
Dollar limitation for employee salary reductions for contributions to health flexible spending arrangements<\/b><\/td>\n$2,700<\/td>\n$2,750<\/td>\n<\/tr>\n
Adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit<\/b><\/td>\n$118,000<\/td>\n$119,000<\/td>\n<\/tr>\n
Maximum credit allowed for adoptions<\/b><\/td>\n$14,300<\/td>\n$14,440<\/td>\n<\/tr>\n
Foreign earned income exclusion<\/b><\/td>\n$107,600<\/td>\n$108,700<\/td>\n<\/tr>\n
Basic exclusion amount for estates of decedents<\/b><\/td>\nEstates of decedents who die during 2020: $11,580,000<\/td>\nEstates of decedents who die during 2021: $11,700,000<\/td>\n<\/tr>\n
Annual exclusion for gifts<\/b><\/td>\n$15,000<\/td>\n$15,000<\/td>\n<\/tr>\n
Standard mileage rates for the use of a car (also vans, pickups or panel trucks)<\/b><\/td>\n\n
    \n
  • 57.5 cents\/mile driven for business use<\/li>\n
  • 17 cents\/mile driven for medical or moving purposes<\/li>\n
  • 14 cents\/mile driven in service of charitable organizations<\/span><\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • 56 cents\/mile driven for business use<\/li>\n
  • 176 cents\/mile driven for medical or moving purposes<\/li>\n
  • 14 cents\/mile driven in service of charitable organizations<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Monthly limit on qualified transportation fringe\u00a0benefits &\u00a0qualified parking<\/b><\/td>\n$270<\/td>\n$270<\/td>\n<\/tr>\n
Contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government\u2019s Thrift Savings Plan<\/b><\/td>\n$19,500<\/td>\n$19,500<\/td>\n<\/tr>\n
Catch-up contribution limit for employees age 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government\u2019s Thrift Savings Plan<\/b><\/td>\n$6,500<\/td>\n$6,500<\/td>\n<\/tr>\n
Limit on annual contributions to an IRA<\/b><\/td>\n$6,000<\/td>\n$6,000<\/td>\n<\/tr>\n
Catch-up contribution limit for individuals aged 50 and over (IRA)<\/b><\/td>\n$1,000<\/td>\n$1,000<\/td>\n<\/tr>\n
If, during the year, either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated, depending on filing status and income<\/b><\/td>\n\n
    \n
  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $65,000 to $75,000<\/li>\n
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $104,000 to $124,000<\/li>\n
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000<\/span><\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $66,000 to $76,000<\/li>\n
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $105,000 to $125,000<\/li>\n
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple\u2019s income is between:<\/b><\/td>\n$196,000 and $206,000<\/td>\n$198,000 and $208,000<\/td>\n<\/tr>\n
Income phase-out range for taxpayers making contributions to a Roth IRA:<\/b><\/td>\n\n
    \n
  • Singles and heads of household: $124,000 to $139,000<\/li>\n
  • Married couples filing jointly: $196,000 to $206,000<\/li>\n
  • Married individual filing a separate return who makes contributions to a Roth IRA and is not subject to an annual cost-of-living adjustment: $0 to $10,000<\/span><\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • Singles and heads of household: $125,000 to $140,000<\/li>\n
  • Married couples filing jointly: $198,000 to $208,000<\/li>\n
  • Married individual filing a separate return who makes contributions to a Roth IRA and is not subject to an annual cost-of-living adjustment: $0 to $10,000<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Income limit for the Saver\u2019s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers<\/b><\/td>\n\n
    \n
  • Married couples filing jointly: $65,000<\/li>\n
  • Heads of household: $48,750<\/li>\n
  • Singles and married individuals filing separately: $32,500<\/span><\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • Married couples filing jointly: $66,000<\/li>\n
  • Heads of household: $49,500<\/li>\n
  • Singles and married individuals filing separately: $33,500<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
SIMPLE\u00a0retirement contribution limit<\/b><\/td>\n$13,500<\/td>\n$13,500<\/td>\n<\/tr>\n<\/thead>\n<\/table>\n

Resources:<\/strong><\/p>\n