Kathy Guerrero
Kathy Guerrero
Kathy Guerrero
,
Kathy Guerrero
2021 Tax Law Changes

2021 Tax Law Changes

Happy New Year! We have made it through an unbelievable 2020 and are now ready to start planning for 2021.

Here are some highlights for the 2021 Tax Year:

The standard deduction and tax brackets for individuals have increased:

2021 Standard Deduction

Filing StatusStandard Deduction Amount
Single$12,550
Married Filing Jointly & Surviving Spouses$25,100
Married Filing Separately$12,550
Heads of Household$18,800

2021 Tax Brackets

RateIndividual TaxpayersMarried Filing Joint & Surviving SpousesHeads of HouseholdMarried Filing Separate
10%$0 - $9,950$0 - $19,900$0 - $14,200$0 - $9,950
12%$9,951 - $40,525$19,901 - $81,050$14,201 - $54,200$9,951 - $40,525
22%$40,526 - $86,375$81,051 - $172,750$54,201 - $86,350$40,526 - $86,375
24%$86,376 - $164,925$172,751 - $329,850$86,351 - $164,900$86,376 - $164,925
32%$164,926 - $209,425$329,851 - $418,850$164,901 - $209,400$164,926 - $209,425
35%$209,426 - $523,600$418,851 - $628,300$209,401 - $523,600$209,426 - $314,150
37%$523,601$628,301$523,601$314,151

The following Tax Credits have increased:

  • The Earned Income Tax Credit’s (EITC) maximum amount available has increased to $6,728 for taxpayers with three or more children.
  • The credit for the adoption of a child has increased to $14,440.

Other items to note:

  • The federal estate tax exemption will increase to $11.7 million per person or $23.4 million per married couple.
  • The gift tax annual exclusion will remain at$15,000.
  • The Section 179 deduction limit is $1,050,000,which means businesses can deduct the full price of qualified equipment purchases, with a total equipment purchase limit of $2,620,000.
  • The Qualified Business Income (QBI), Section199A deduction (also called the pass-through deduction) for sole proprietors and owners of pass-through businesses is still eligible for a deduction of up to 20% to bring the tax rate lower for qualified business income. The deduction is subject to an income threshold which has increased for 2021:
Filing StatusIncome Threshold (Limit for the Full Deduction)Income Limit for a Partial Deduction
Married Filing Jointly & Surviving Spouses$329,800$429,800
Married Filing Separately$164,925$214,925
All Other Taxpayers$164,900$214,900

With a new presidency about to begin, we expect more changes to come. We will keep you up to date as the year progresses.

We hope you find this valuable and if you have questions, please callus at 210-829-1300 or make an appointment now, using the link below.


ADKF
is the largest, locally owned public accounting firm in San Antonio, Texas, with branch offices in Boerne and New Braunfels. We have been serving our community since 1991. We are a full-service CPA firm dedicated to providing a broad range of tax, audit, bookkeeping, tax controversy, and consulting services with superior customer service to help our clients meet their goals and objectives. Please click here to set an appointment with us.

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