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
2021 Tax Brackets
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:
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.