The following table provides some important federal tax information for 2021, as compared with 2020. Some of the dollar amounts are unchanged and some changed only slightly due to inflation.
| Social Security/Medicare | 2021 | 2020 |
| Social Security Tax Wage Base | $142,800 | $137,700 |
| Medicare Tax Wage Base | No limit | No limit |
| Employee portion of Social Security | 6.2% | 6.2% |
| Employee portion of Medicare | 1.45% | 1.45% |
| Individual Retirement Accounts | 2021 | 2020 |
| Roth IRA Individual, up to 100% of earned income | $6,000 | $6,000 |
| Traditional IRA Individual, up to 100% of earned income | $6,000 | $6,000 |
| Roth and traditional IRA additional annual “catch-up” contributions for account owners age 50 and older | $1,000 | $1,000 |
| Qualified Plan Limits | 2021 | 2020 |
| Defined Contribution Plan limit on additions on Sections 415(c)(1)(A) | $58,000 | $57,000 |
| Defined Benefit Plan limit on benefits (Section 415(b)(1)(A)) | $230,000 | $230,000 |
| Maximum compensation used to determine contributions | $290,000 | $285,000 |
| 401(k), SARSEP, 403(b) Deferrals (Section 402(g)), & 457 deferrals (Section 457(b)(2)) | $19,500 | $19,500 |
| 401(k), 403(b), 457 & SARSEP additional “catch-up” contributions for employees age 50 and older | $6,500 | $6,500 |
| SIMPLE deferrals (Section 408(p)(2)(A)) | $13,500 | $13,500 |
| SIMPLE additional “catch-up” contributions for employees age 50 and older | $3,000 | $3,000 |
| Compensation defining highly compensated employee (Section 414(q)(1)(B)) |
$130,000 | $130,000 |
| Compensation defining key employee (officer) | $185,000 | $185,000 |
| Compensation triggering Simplified Employee Pension contribution requirement 9Section 408(k)(2)(c)) | $650 | $600 |
| Driving Deductions | 2021 | 2020 |
| Business mileage, per mile | 56 cents | 57.5 cents |
| Charitable mileage, per mile | 14 cents | 14 cents |
| Medical and moving, per mile | 16 cents | 17 cents |
| Business Equipment | 2021 | 2020 |
| Maximum Section 179 deduction | $1,050,000 | $1,040,000 |
| Phase out for Section 179 | $2.62 million | $2.59 million |
| Transportation Fringe Benefit Exclusion | 2021 | 2020 |
| Monthly commuter highway vehicle and transit pass | $270 | $270 |
| Monthly qualified parking | $270 | $270 |
| Standard deduction | 2021 | 2020 |
| Married filing jointly | $25,100 | $24,800 |
| Single (and married filing separately) | $12,550 | $12,400 |
| Heads of Household | $18,800 | $18,650 |
| Domestic Employees | 2021 | 2020 |
| Threshold when a domestic employee must withhold and pay FICA for babysitters, house cleaners, etc. | $2,300 | $2,200 |
| Business Meals | 2021 | 2020 |
| Deduction for eligible business-related food and beverage expenses | 100%* | 50% |
| Estate Tax | 2021 | 2020 |
| Federal estate tax exemption | $11.7 million | $11.58 million |
| Maximum estate tax rate | 40% | 40% |
| Annual Gift Exclusion | 2021 | 2020 |
| Amount you can give each recipient | $15,000 | $15,000 |
*Incurred in restaurants. This is part of the Consolidated Appropriations Act, signed into law on December 27, 2020.
