This is for tax year 2021 (and filed in April 2022), click here for 2020's guide.
- Tax brackets increased with inflation.
- IRA contribution limits are unchanged.
- Certain COVID related alterations and specifics.
|2021 Tax Bracket||Single Income||Married Income|
|10%||$0 to $9,950||$0 to $19,900|
|12%||$9,950 to $40,525||$19,900 to $81,050|
|22%||$40,525 to $86,375||$81,050 to $172,750|
|24%||$86,375 to $164,925||$172,750 to $329,850|
|32%||$164,925 to $209,425||$329,850 to $418,850|
|35%||$209,425 to $523,600||$418,850 to $628,300|
|2021 Capital Gains||Single Income||Married Income|
|0%||$0 to $40,400||$0 to $80,800|
|15%||$40,400 to $445,850||$80,800 to $501,600|
|2021 Additional Taxes||Single||Married|
|Social Security Tax Cap (6.2%)||$137,700 and under||$0 to $80,000|
|Net Investment Income (3.8%)||$200,000+ MAGI||$250,000+ MAGI|
|2021 Retirement Contribution Limits||Under Age 50||Age 50+|
|IRA||Up to $6,000||(+$1,000)|
|401(K) or TSP||Up to $19,500||(+6,500)|
|SEP IRA or Solo 401(K)||Up to $57,000||(+6,500)|
|2021 Standard Deduction||Single||Married|
New & COVID Related
- Unemployment compensation is taxable (will receive a 1099-G form), while stimulus checks are not.
- Unless you are self-employed, you can not deduct home office expenses.
- Flexible Spending Accounts - Permitted to carry over funds from 2020 to 2021 and 2021 to 2022.
- Charitable deduction allowed ($300 - see below) for non-itemizers.
- Remote working may require multiple state income tax returns - varies by state. Usually you can receive credit for taxes paid to other states.
- Business meal deductions - 100% for 2021 and 2022.
- IRA/401k withdraws in declared disasters - up to $100,000 can be taken out for 3 years or permanently added to taxable income.
Deductions & Credits Overview
- Charitable deduction - Up to $300 non-itemized or up to 100% of AGI itemized for 2020 & 2021. See below.
- Medical expense deduction - Established permanent threshold of 7.5% of AGI.
- Recovery Rebate Credit - For those who meet qualifications based on 2020 income but did not receive a stimulus check for $1,200 this year (see breakout section). Non-taxable.
- Child Tax Credit - $2,000/child tax credit (income under $200,000/$400,000). See below.
- Self-employed deductions - Multiple.
- Earned Income Tax Credit (EITC) - Income under $56,844.
- Saver's Credit - Income under $32,500/$65,000.
Charitable Deduction Overview
New for 2020 and 2021.
Non-itemizers can take a charitable deduction of up to $300 on taxable income (but not Adjusted Gross Income (AGI) which is used for certain Roth IRA, investment surtax, and Medicare premium thresholds).
Itemizers can deduct up to 100% of AGI.
Recovery Rebate Credit Overview
Stimulus checks are legally a tax credit that is paid in advance. Most people will receive their check directly, however if you did not it is still possible to receive it through the normal tax filing process.
This is the limit for how much you can deduct when contributing to a Traditional IRA. You can still contribute if you earn more than this amount, it just won't be tax deductible.
|2021 Traditional IRA||Single||Married|
|Deduction Phase-out||$66,000 to $76,000||$105,000 to $125,000|
|Non-deductable||Any income||Any income|
Note: If you or your spouse are not covered by a workplace retirement plan additional rules apply.
This is the limit for who can contribute to a Roth IRA. If you are above this, you can do a "backdoor" contribution by contributing to a Traditional IRA and converting it to a Roth.
|2021 Roth IRA||Single||Married|
|Direct Contribution Phase-out||$125,000 to $140,000||$198,000 to $208,000|
|Backdoor/Conversion||Any income||No income|
Note: If you wish to pursue a backdoor contribution and have other/previous Traditional IRA assets there are additional rules.
Military & Veterans
Special Rules to Remember
- Combat zone pay is non-taxable
- VA Disability Benefits are not included in gross income
Free Tax services
- IRS Free File (income under $69,000)
- Military OneSource (any)
- Volunteer Income Tax Assistance program (income under $56,000)
The Alternative Minimum Tax (AMT) Exemption increased by $700 to $73,600 and phases out beginning at $523,600 ($114,600/$1,047,200 for married)
The Foreign Earned Income Exclusion is up $1,100 to $108,700.
The Estates Tax basic exclusion amount is up to $11,700,000. The annual exclusion for gifts remains at $15,000.
There is too much individual variability to cover here, but as a point of reference here is a graphic courtesy of our friends at Visual Capitalist.