ADV Brochure | Form CRS

2021 Key Numbers For Individual Income Tax Planning

Adoption Credit

Adoption credit 2020 2021
Maximum credit $14,300 $14,440
Phaseout threshold amount $214,520 $216,660
Completed phaseout amount after $254,520 $256,660

Alternative Minimum Tax (AMT)

Maximum AMT exemption amount 2020 2021
Married filing jointly or surviving spouse $113,400 $114,600
Single or head of household $72,900 $73,600
Married filing separately $56,700 $57,300
AMT income exemption phaseout threshold 2020 2021
Married filing jointly or surviving spouse $1,036,800 $1,047,200
Single or head of household $518,400 $523,600
Married filing separately $518,400 $523,600
AMT tax rate (26% rate applies to AMTI at or below amount; 28% applies to AMTI above amount) 2020 2021
All taxpayers except married filing separately $197,900 $199,900
Married filing separately $98,950 $99,950

Charitable deductions

Use of auto 2020 2021
Deductible standard mileage rate $0.14 $0.14
Charitable fundraising “insubstantial benefit” limitation 2020 2021
Low-cost article (re: unrelated business income) $11.20 $11.30
Gifts to donor in return for contribution 2020 2021
Token gift maximum cost1 $11.20 $11.30
Minimum contribution amount1 $56 $56.50
2% threshold amount2 $112 $113

1 Contribution is fully deductible if minimum contribution amount is met and cost of token gift does not exceed maximum

2 Charitable contribution is fully deductible if the benefit received by the donor doesn’t exceed the lesser of the threshold amount or 2% of the amount of the contribution

Child Tax Credit

Amount of credit 2020 2021
Maximum credit per qualifying child $2,000 $2,000
Nonrefundable credit for dependents who are not qualifying children $500 $500
Phaseout — credit reduced by $50 for each $1,000 or fraction thereof of MAGI over: 2020 2021
Single $200,000 $200,000
Married Filing Jointly $400,000 $400,000
Married Filing Separately $200,000 $200,000
Refundability — up to specified percentage of earned income in excess of specified amount 2020 2021
Percentage 15% 15%
Amount $2,500 $2,500
Maximum refundable amount of credit $1,400 $1,400

Classroom Expenses of Elementary and Secondary School Teachers

Classroom expense deduction 2020 2021
Maximum above-the-line deduction $250 $250

Earned Income Tax Credit (EITC)

Investment income limit 2020 2021
Excessive investment income limit (“disqualified income limit”) $3,650 $3,650
Maximum amount of EITC per number of children 2020 2021
0 children $538 $543
1 child $3,584 $3,618
2 children $5,920 $5,980
3 or more children $6,660 $6,728
Maximum amount of earned income on which EITC is based (earned income over this amount but under the threshold phaseout amount will not change the amount of the credit received) 2020 2021
0 children $7,030 $7,100
1 child $10,540 $10,640
2 or more children $14,800 $14,950
Threshold phaseout amount for joint filers per number of children 2020 2021
0 children $14,680 $14,820
1 child $25,220 $25,470
2 children $25,220 $25,470
3 or more children $25,220 $25,470
Threshold phaseout amount for other filers per number of children 2020 2021
0 children $8,790 $8,880
1 child $19,330 $19,520
2 children $19,330 $19,520
3 or more children $19,330 $19,520
Completed phaseout amount for joint filers per number of children 2020 2021
0 children $21,710 $21,920
1 child $47,646 $48,108
2 children $53,330 $53,865
3 or more children $56,844 $57,414
Completed phaseout amount for other filers per number of children 2020 2021
0 children $15,820 $15,980
1 child $41,756 $42,158
2 children $47,440 $47,915
3 or more children $50,954 $51,464

Expatriation

Covered expatriate 2020 2021
An individual with “average annual net income tax” of more than this amount for the five taxable years ending before his or her loss of citizenship is a covered expatriate for the purposes of IRC §877A(g)(1) $171,000 $172,000
IRC §877A(3) exclusion amount $737,000 $744,000

Foreign Earned Income

Amount excluded from income 2020 2021
Exclusion amount $107,600 $108,700

Itemized Deductions

Phaseout threshold 2020 2021
Married filing jointly N/A N/A
Head of household N/A N/A
Unmarried N/A N/A
Married filing separately N/A N/A

Kiddie Tax

Unearned income limit 2020 2021
Amount exempt from tax $1,100 $1,100
Additional amount taxed at child’s rate $1,100 $1,100
Unearned income over this amount generally taxed at parents’ tax rates1 $2,200 $2,200
Parent’s election 2020 2021
Election to include child’s income on parent’s return — child’s gross income requirement $1,100 – $11,000 $1,100 – $11,000
AMT 2020 2021
AMT exemption for child subject to kiddie tax Lesser of $7,900 + child’s earned income or $72,900 Lesser of $7,950 + child’s earned income or $73,600
1 Taxed at parents’ tax rates in 2020 and 2021. In 2019, taxed at trust and estate income tax rates (special rules apply to alternative minimum tax purposes) but retroactive election may be made to tax at parents’ tax rates.

Medicare Tax (additional payroll tax and unearned income contribution tax)

Payroll tax 2020 2021
Additional Medicare payroll tax (and self-employment tax) percentage rate 0.90% 0.90%
Applies to wages/self-employment income exceeding 2020 2021
Individuals $200,000 $200,000
Married filing jointly $250,000 $250,000
Married filing separately $125,000 $125,000
Tax on unearned income 2020 2021
Unearned income Medicare contribution tax rate 3.80% 3.80%
Applies to lesser of (a) net investment income or (b) modified adjusted gross income exceeding 2020 2021
Individuals $200,000 $200,000
Married filing jointly $250,000 $250,000
Married filing separately $125,000 $125,000

Nanny Tax

Compensation threshold 2020 2021
Domestic employee coverage threshold $2,200 $2,300

Personal Exemption Amount

Amount 2020 2021
Personal exemption amount N/A N/A
Married filing jointly 2020 2021
Phaseout threshold amount N/A N/A
Completed phaseout amount after N/A N/A
Head of household 2020 2021
Phaseout threshold amount N/A N/A
Completed phaseout amount after N/A N/A
Unmarried 2020 2021
Phaseout threshold amount N/A N/A
Completed phaseout amount after N/A N/A
Married filing separately 2020 2021
Phaseout threshold amount N/A N/A
Completed phaseout amount after N/A N/A

“Saver’s Credit”

Elective Deferrals and IRA or ABLE Contributions by Certain Individuals 2020 2021
Maximum credit amount $1,000 $1,000
Applicable percentage of 50% applies to AGI 2020 2021
Joint Return $0 – $39,000 $0 – $39,500
Head of Household $0 – $29,250 $0 – $29,625
Other $0 – $19,500 $0 – $19,750
Applicable percentage of 20% applies to AGI 2020 2021
Joint Return $39,001 – $42,500 $39,501 – $43,000
Head of Household $29,251 – $31,875 $29,626 – $32,250
Other $19,501 – $21,250 $19,751 – $21,500
Applicable percentage of 10% applies to AGI 2020 2021
Joint Return $42,501 – $65,000 $43,001 – $66,000
Head of Household $31,876 – $48,750 $32,251 – $49,500
Other $21,251 – $32,500 $21,501 – $33,000
Applicable percentage of 0% applies to AGI 2020 2021
Joint Return Over $65,000 Over $66,000
Head of Household Over $48,750 Over $49,500
Other Over $32,500 Over $33,000

Standard Deductions

Amounts 2020 2021
Married filing jointly or surviving spouse $24,800 $25,100
Head of household $18,650 $18,800
Unmarried $12,400 $12,550
Married filing separately $12,400 $12,550
Dependent–Standard deduction cannot exceed the greater of: $1,100 or $350 + earned income $1,100 or $350 + earned income
Additional deduction for aged or blind (single or head of household) $1,650 $1,700
Additional deduction for aged or blind (all other filing statuses) $1,300 $1,350

Standard Mileage Rates

Applicable rates 2020 2021
Use of auto for business purposes (cents per mile) $0.575 TBD
Use of auto for medical purposes (cents per mile) $0.17 TBD
Use of auto for moving purposes (cents per mile) $0.17 TBD

2021 Federal Income Tax Rate Schedules (Individuals, Trusts, and Estates)

Single Taxpayers

If taxable income is: Your tax is:
Not over $9,950 10% of taxable income
Over $9,950 to $40,525 $995 + 12% of the excess over $9,950
Over $40,525 to $86,375 $4,664 + 22% of the excess over $40,525
Over $86,375 to $164,925 $14,751 + 24% of the excess over $86,375
Over $164,925 to $209,425 $33,603 + 32% of the excess over $164,925
Over $209,425 to $523,600 $47,843 plus 35% of the excess over $209,425
Over $523,600 $157,804.25 plus 37% of the excess over $523,600

Married Filing Jointly and Surviving Spouses

If taxable income is: Your tax is:
Not over $19,900 10% of taxable income
Over $19,900 to $81,050 $1,990 + 12% of the excess over $19,900
Over $81,050 to $172,750 $9,328 plus 22% of the excess over $81,050
Over $172,750 to $329,850 $29,502 plus 24% of the excess over $172,750
Over $329,850 to $418,850 $67,206 plus 32% of the excess over $329,850
Over $418,850 to $628,300 $95,686 plus 35% of the excess over $418,850
Over $628,300 $168,993.50 plus 37% of the excess over $628,300

Married Individuals Filing Separately

If taxable income is: Your tax is:
Not over $9,950 10% of taxable income
Over $9,950 to $40,525 $995 + 12% of the excess over $9,950
Over $40,525 to $86,375 $4,664 plus 22% of the excess over $40,525
Over $86,375 to $164,925 $14,751 plus 24% of the excess over $86,375
Over $164,925 to $209,425 $33,603 plus 32% of the excess over $164,925
Over $209,425 to $314,150 $47,843 plus 35% of the excess over $209,425
Over $314,150 $84,496.75 plus 37% of the excess over $314,150

Heads of Household

If taxable income is: Your tax is:
Not over $14,200 10% of taxable income
Over $14,200 to $54,200 $1,420 + 12% of the excess over $14,200
Over $54,200 to $86,350 $6,220 plus 22% of the excess over $54,200
Over $86,350 to $164,900 $13,293 plus 24% of the excess over $86,350
Over $164,900 to $209,400 $32,145 plus 32% of the excess over $164,900
Over $209,400 to $523,600 $46,385 plus 35% of the excess over $209,400
Over $523,600 $156,355 plus 37% of the excess over $523,600

Trusts and estates

If taxable income is: Your tax is:
Not over $2,650 10% of taxable income
Over $2,650 to $9,550 $265 + 24% of the excess over $2,650
Over $9,550 to $13,050 $1,921 + 35% of the excess over $9,550
Over $13,050 $3,146 + 37% of the excess over $13,050

Business Planning

Adoption Assistance Programs

Adoption assistance 2020 2021
Maximum amount that can be excluded from employee’s gross income $14,300 $14,440
Phaseout threshold amount $214,520 $216,660
Completed phaseout amount after $254,520 $256,660

Earnings Subject to FICA Taxes (taxable wage base)

FICA tax 2020 2021
Maximum annual earnings subject to Social Security taxes $137,700 $142,800
Social Security and Medicare combined tax rate 15.30%1 15.30%1
OASDI portion (Social Security) 12.40% 12.40%
Hospital Insurance portion (Medicare) 2.90%1 2.90%1

1 An additional Medicare (HI) employee contribution rate of 0.9% (for a total employee contribution of 2.35%, and a total combined Medicare contribution rate of 3.8%) is assessed on wages exceeding $200,000 ($250,000 for married couples filing joint returns, $125,000 for married individuals filing separate returns). For married individuals filing joint returns, the additional 0.9% tax applies to the couples combined wages (to the extent the combined wages exceed $250,000).

Health Insurance Deduction for Self-employed

Health insurance premiums 2020 2021
Deduction for health insurance premiums paid by self-employed persons 100% 100%

Qualified Transportation Fringe Benefits

Qualified transportation fringe benefits 2020 2021
Commuter vehicles and transit pass monthly exclusion amount $270 $270
Qualified parking monthly exclusion amount $270 $270
Qualified bicycle commuting reimbursement fringe benefit (monthly amount) N/A N/A

Section 179 Expensing

Section 179 expensing 2020 2021
Maximum amount that may be deducted under IRC Section 179 $1,040,000 $1,050,000
Deduction reduced by the amount by which the cost of §179 property placed in service during the year exceeds this amount $2,590,000 $2,620,000

Small Business Tax Credit for Providing Health-care Coverage

Amount of credit 2020 2021
Maximum credit percentage 50% 50%
Partial credit 2020 2021
Number of full-time equivalent employees (FTEs) fewer than: 25 25
Maximum average annual wages less than: $55,200 $55,600
Full credit 2020 2021
Number of full-time equivalent employees (FTEs) no more than: 10 10
Maximum average annual wages less than or equal to: $27,600 $27,800

Special Additional First-year Depreciation Allowance

Bonus depreciation 2020 2021
“Bonus” depreciation for qualified property acquired and placed in service during specified time periods 100% 100%

Standard Mileage Rate (per mile)

Business use of auto 2020 2021
Use of auto for business purposes $0.575 TBD

Education Planning

American Opportunity and Lifetime Learning Credits

Education credits 2020 2021
Maximum American Opportunity credit $2,500 $2,500
Maximum Lifetime Learning credit $2,000 $2,000
MAGI phaseout range for American Opportunity credit 2020 2021
Single–phaseout threshold amount $80,000 $80,000
Single–completed phaseout amount after $90,000 $90,000
Married filing jointly–phaseout threshold amount $160,000 $160,000
Married filing jointly–completed phaseout amount after $180,000 $180,000
MAGI phaseout range for Lifetime Learning credit 2020 2021
Single–phaseout threshold amount $59,000 $59,000
Single–completed phaseout amount after $69,000 $69,000
Married filing jointly–phaseout threshold amount $118,000 $119,000
Married filing jointly–completed phaseout amount after $138,000 $139,000

Coverdell Education Savings Accounts

Coverdell ESAs 2020 2021
Annual contribution limit $2,000 $2,000
MAGI phaseout range for Coverdell education savings accounts 2020 2021
Single–phaseout threshold amount $95,000 $95,000
Single–completed phaseout amount after $110,000 $110,000
Married filing jointly–phaseout threshold amount $190,000 $190,000
Married filing jointly–completed phaseout threshold amount $220,000 $220,000

Deduction for Qualified Higher Education Expenses

Higher education expenses 2020 2021
Maximum deduction $4,000 N/A
MAGI maximum for full $4,000 deduction 2020 2021
Single $65,000 N/A
Married filing jointly $130,000 N/A
MAGI range for $2,000 deduction 2020 2021
Single–MAGI greater than this amount: $65,000 N/A
Single–MAGI does not exceed this amount: $80,000 N/A
Married filing jointly–MAGI greater than this amount: $130,000 N/A
Married filing jointly–MAGI does not exceed this amount: $160,000 N/A

Deduction for Student Loan Interest

Education loan interest deduction 2020 2021
Maximum deduction for interest paid on qualified education loans $2,500 $2,500
MAGI phaseout range 2020 2021
Single–phaseout threshold amount $70,000 $70,000
Single–completed phaseout amount after $85,000 $85,000
Married filing jointly–phaseout threshold amount $140,000 $140,000
Married filing jointly–completed phaseout amount after $170,000 $170,000

Gift Tax Exclusion

Gift tax 2020 2021
Annual gift tax exclusion–single individual $15,000 $15,000
Annual gift tax exclusion–joint gift $30,000 $30,000
Lump-sum gift to 529 plan–single individual $75,000 $75,000
Lump-sum gift to 529 plan–joint gift $150,000 $150,000

Kiddie Tax

Kiddie tax 2020 2021
Children’s unearned income over this amount generally taxed at parents’ tax rates $2,200 $2,200

U.S. Savings Bonds Interest Exclusion for College Expenses

Joint returns 2020 2021
Phaseout threshold for joint returns $123,550 $124,800
Completed phaseout amount after $153,550 $154,800
Other returns 2020 2021
Phaseout threshold for other returns $82,350 $83,200
Completed phaseout amount after $97,350 $98,200

Protection Planning

Eligible Long-term Care Premium Deduction Limits:

LTC premium deduction limits 2020 2021
Age 40 or under $430 $450
Age 41-50 $810 $850
Age 51-60 $1,630 $1,690
Age 61-70 $4,350 $4,520
Over age 70 $5,430 $5,640

Per Diem Limit:

LTC periodic payments 2020 2021
Periodic payments for qualified long-term care insurance/certain life insurance $380 $400

Archer Medical Savings Accounts

High deductible health plan–self-only coverage 2020 2021
Annual deductible–minimum $2,350 $2,400
Annual deductible–maximum $3,550 $3,600
Annual out-of-pocket expenses required to be paid (other than for premiums) can’t exceed $4,750 $4,800
High deductible health plan–family coverage 2020 2021
Annual deductible–minimum $4,750 $4,800
Annual deductible–maximum $7,100 $7,150
Annual out-of-pocket expenses required to be paid (other than for premiums) can’t exceed $8,650 $8,750

Flexible Spending Account (FSA) for Health Care

Health care FSAs 2020 2021
Maximum salary reduction contribution $2,750 $2,750

Health Savings Accounts (HSAs)

Annual contribution limit 2020 2021
Self-only coverage $3,550 $3,600
Family coverage $7,100 $7,200
High deductible health plan–self-only coverage 2020 2021
Annual deductible–minimum $1,400 $1,400
Annual out-of-pocket expenses required to be paid (other than for premiums) can’t exceed $6,900 $7,000
High deductible health plan–family coverage 2020 2021
Annual deductible–minimum $2,800 $2,800
Annual out-of-pocket expenses required to be paid (other than for premiums) can’t exceed $13,800 $14,000
Catch-up contributions 2020 2021
Annual catch-up contribution limit for individuals age 55 or older $1,000 $1,000

Estate Planning

Key indexed figures 2020 2021
Annual gift exclusion: $15,000 $15,000
Gift and estate tax applicable exclusion amount: $11,580,000 + DSUEA1 $11,700,000 + DSUEA1
Noncitizen spouse annual gift exclusion: $157,000 $159,000
Generation-skipping transfer (GST) tax exemption: $11,580,0002 $11,700,0002
Special use valuation limit (qualified real property in decedent’s gross estate): $1,180,000 $1,190,000

1 Basic exclusion amount plus deceased spousal unused exclusion amount (exclusion is portable for 2011 and later years)

2 The GST tax exemption is not portable

2020 and 2021 Gift and Estate Tax Rate Schedule

Taxable Estate Tentative Tax Equals Plus Of Amount Over
0 – $10,000 $0 18% $0
$10,000 – $20,000 $1,800 20% $10,000
$20,000 – $40,000 $3,800 22% $20,000
$40,000 – $60,000 $8,200 24% $40,000
$60,000 – $80,000 $13,000 26% $60,000
$80,000 – $100,000 $18,200 28% $80,000
$100,000 – $150,000 $23,800 30% $100,000
$150,000 – $250,000 $38,800 32% $150,000
$250,000 – $500,000 $70,800 34% $250,000
$500,000 – $750,000 $155,800 37% $500,000
$750,000 – $1,000,000 $248,300 39% $750,000
$1,000,000 + $345,800 40% $1,000,000
Credit shelter amount $11,580,000 in 2020 and $11,700,000 in 2021 Unified credit amount $4,577,800 in 2020 and $4,625,800 in 2021

Government Benefits

Social Security

Social Security Cost-of-living adjustment (COLA) 2020 2021
For Social Security and Supplemental Security Income (SSI) beneficiaries 1.60% 1.30%
Tax rate–employee 2020 2021
FICA tax — Employee 7.65% 7.65%
Social Security (OASDI) portion of tax 6.20% 6.20%
Medicare (HI) portion of tax 1.45%1 1.45%1
Tax rate–self-employed 2020 2021
Self-Employed 15.30% 15.30%
Social Security (OASDI) portion of tax 12.40% 12.40%
Medicare (HI) portion of tax 2.90%1 2.90%1

1 An additional 0.9% Medicare/hospital insurance tax (for a total employee contribution of 2.35%) is assessed on wages exceeding $200,000 ($250,000 for married couples filing joint returns, $125,000 for married individuals filing separate returns). An additional 0.9% Medicare/hospital insurance tax (for a total Medicare portion of 3.8%) is assessed on self-employment income exceeding $200,000 ($250,000 for married couples filing joint returns, $125,000 for married individuals filing separate returns).

Maximum taxable earnings 2020 2021
Social Security (OASDI only) $137,700 $142,800
Medicare (HI only) No limit No limit
Quarter of coverage 2020 2021
Earnings required $1,410 $1,470
Retirement earnings test–exempt amounts–Under full retirement age–Benefits reduced by $1 for each $2 earned above: 2020 2021
Yearly figure $18,240 $18,960
Monthly figure $1,520 $1,580
Retirement earnings test–exempt amounts–Year individual reaches full retirement age–Benefits reduced by $1 for each $3 earned above (applies only to earnings for months prior to attaining full retirement age): 2020 2021
Yearly figure $48,600 $50,520
Monthly figure $4,050 $4,210
Retirement earnings test–exempt amounts–Beginning the month individual attains full retirement age 2020 2021
No limit on earnings No limit on earnings
Social Security disability thresholds 2020 2021
Substantial gainful activity (SGA) for the sighted (monthly figure) $1,260 $1,310
Substantial gainful activity for the blind (monthly figure) $2,110 $2,190
Trial work period (TWP) (monthly figure) $910 $940
SSI federal payment standard 2020 2021
Individual (monthly figure) $783 $794
Couple (monthly figure) $1,175 $1,191
SSI resource limits 2020 2021
Individual $2,000 $2,000
Couple $3,000 $3,000
SSI student exclusion limits 2020 2021
Monthly limit $1,900 $1,930
Annual limit $7,670 $7,770
Maximum Social Security benefit 2020 2021
Worker retiring at full retirement age (monthly figure) $3,011 $3,148
Formula for Monthly Primary Insurance Amount (PIA) 2020 2021
(90% of first X of AIME + 32% of the AIME over X and through Y + 15% of AIME over Y) X=$960 Y=$5,785 X=$996 Y=$6,002

Medicare

Medicare monthly premium amounts–Part A (hospital insurance) premium 2020 2021
Individuals with 40 or more quarters of Medicare-covered employment $0 $0
Individuals with less than 40 quarters of Medicare-covered employment who are not otherwise eligible for premium-free hospital insurance Up to $458 Up to $471
Medicare monthly premium amounts–Part B (medical insurance) monthly premium–for beneficiaries who file an individual income tax return with income that is: 2020 2021
Less than or equal to $88,000 $144.602 $148.502
$88,001 – $111,000 $202.40 $207.90
$111,001 – $138,000 $289.20 $297.00
$138,001 – $165,000 $376.00 $386.10
$165,001 – $499,999 $462.70 $475.20
$500,000 and above $491.60 $504.90
Medicare monthly premium amounts–Part B (medical insurance) monthly premium–for beneficiaries who file a joint income tax return with income that is: 2020 2021
Less than or equal to $176,000 $144.602 $148.502
$176,001 – $222,000 $202.40 $207.90
$222,001 – $276,000 $289.20 $297.00
$276,001 – $330,000 $376.00 $386.10
$330,001 – $749,999 $462.70 $475.20
$750,000 and above $491.60 $504.90
Medicare monthly premium amounts–Part B (medical insurance) monthly premium–for beneficiaries who are married, but file a separate tax return from their spouse and lived with spouse at some time during the taxable year with income that is: 2020 2021
Less than or equal to $88,000 $144.602 $148.502
$88,001 – $412,000 $462.70 $475.20
$412,000 and above $491.60 $504.90

2 This is the standard Part B premium amount. However, some people who get Social Security benefits will pay more or less than this amount.

Original Medicare plan deductible and coinsurance amounts–Part A (hospital insurance) 2020 2021
Deductible per benefit period $1,408 $1,484
Coinsurance per day for 61st to 90th day of each benefit period $352 $371
Coinsurance per day for 91st to 150th day for each lifetime reserve day (total of 60 lifetime reserve days–nonrenewable) $704 $742
Original Medicare plan deductible and coinsurance amounts 2020 2021
Skilled nursing facility coinsurance per day for 21st to 100th day of each benefit period $176 $185.50
Original Medicare plan deductible and coinsurance amounts–Part B (medical insurance) annual deductible 2020 2021
Individual pays 20 percent of the Medicare-approved amount for services after deductible is met $198 $203

Medicaid

Income threshold 2020 2021
Monthly income threshold for income-cap states (“300 percent cap limit”) $2,349 $2,382
Monthly maintenance needs allowance for at-home spouse 2020 2021
Minimum 3 $2,113.75 $2,155.00
Maximum $3,216 TBD
Community spousal resource allowance 2020 2021
Minimum $25,728 TBD
Maximum $128,640 TBD

3 Amounts listed actually effective as of July of prior year; different amounts apply to Alaska and Hawaii.

Retirement Planning

Employee/Individual Contribution Limits

Elective deferral limits 2020 2021
401(k) plans, 403(b) plans, 457(b) plans, and SAR-SEPs 1 [Includes Roth 401(k) and Roth 403(b) contributions] Lesser of $19,500 or 100% of participant’s compensation Lesser of $19,500 or 100% of participant’s compensation
SIMPLE 401(k) plans and SIMPLE IRA plans1 Lesser of $13,500 or 100% of participant’s compensation Lesser of $13,500 or 100% of participant’s compensation

1 Must aggregate employee contributions to all 401(k), 403(b), SAR-SEP, and SIMPLE plans of all employers. 457(b) plan contributions are not aggregated. For SAR-SEPs, the percentage limit is 25% of compensation reduced by elective deferrals (effectively, a 20% maximum contribution).

IRA contribution limits 2020 2021
Traditional IRAs Lesser of $6,000 or 100% of earned income Lesser of $6,000 or 100% of earned income
Roth IRAs Lesser of $6,000 or 100% of earned income Lesser of $6,000 or 100% of earned income
Additional “catch-up” limits (individuals age 50 or older) 2020 2021
401(k) plans, 403(b) plans, 457(b) plans, and SAR-SEPs2 $6,500 $6,500
SIMPLE 401(k) plans and SIMPLE IRA plans $3,000 $3,000
IRAs (traditional and Roth) $1,000 $1,000

2 Special catch-up limits may also apply to 403(b) and 457(b) plan participants.

Employer Contribution/Benefit 3 Limits

Defined benefit plan limits 2020 2021
Annual contribution limit per participant No predetermined limit. Contributions based on amount needed to fund promised benefits No predetermined limit. Contributions based on amount needed to fund promised benefits
Annual benefit limit per participant Lesser of $230,000 or 100% of average compensation for highest three consecutive years Lesser of $230,000 or 100% of average compensation for highest three consecutive years
Defined contribution plan limits [qualified plans, 403(b) plans, SEP, and SIMPLE plans] 2020 2021
Annual addition limit per participant (employer contributions; employee pre-tax, after-tax, and Roth contributions; and forfeitures) (does not apply to SIMPLE IRA plans) Lesser of $57,000 or 100% (25% for SEP) of participant’s compensation Lesser of $58,000 or 100% (25% for SEP) of participant’s compensation
Maximum tax-deductible employer contribution [not applicable to 403(b) plans] 25% of total compensation of employees covered under the plan (20% if self employed) plus any employee pre-tax and Roth contributions; 100% for SIMPLE plans 25% of total compensation of employees covered under the plan (20% if self employed) plus any employee pre-tax and Roth contributions; 100% for SIMPLE plans

3 For self-employed individuals, compensation generally means earned income. This means that, for qualified plans, deductible contributions for a self-employed individual are limited to 20% of net earnings from self-employment (net profits minus self-employment tax deduction), and special rules apply in calculating the annual additions limit.

Compensation Limits/Thresholds

Retirement plan compensation limits 2020 2021
Maximum compensation per participant that can be used to calculate tax-deductible employer contribution (qualified plans and SEPs) $285,000 $290,000
Compensation threshold used to determine a highly compensated employee $130,000 (when 2020 is the look-back year) $130,000 (when 2021 is the look-back year)
Compensation threshold used to determine a key employee in a top-heavy plan $1 for more-than-5% owners, $185,000 for officers, $150,000 for more-than-1% owners $1 for more-than-5% owners, $185,000 for officers, $150,000 for more-than-1% owners
Compensation threshold used to determine a qualifying employee under a SIMPLE plan $5,000 $5,000
Compensation threshold used to determine a qualifying employee under a SEP plan $600 $650
Traditional deductible IRA income limits — Income phase-out range for determining deductibility of traditional IRA contributions for taxpayers covered by an employer-sponsored plan and filing as: 2020 2021
Single $65,000 – $75,000 $66,000 – $76,000
Married filing jointly $104,000 – $124,000 $105,000 – $125,000
Married filing separately $0 – $10,000 $0 – $10,000
Traditional deductible IRA income limits — Income phase-out range for determining deductibility of traditional IRA contributions for taxpayers not covered by an employer-sponsored retirement plan but filing a: 2020 2021
Joint return with a spouse who is covered by an employer-sponsored retirement plan $196,000 – $206,000 $198,000 – $208,000
Roth IRA compensation limits — Income phase-out range for determining ability to fund Roth IRA for taxpayers filing as: 2020 2021
Single $124,000 – $139,000 $125,000 – $140,000
Married filing jointly $196,000 – $206,000 $198,000 – $208,000
Married filing separately $0 – $10,000 $0 – $10,000

Investment Planning

Maximum Tax on Long-term Capital Gains and Qualified Dividends

0% rate applies (taxable income thresholds) 2020 2021
Single Up to $40,000 Up to $40,400
Married filing jointly Up to $80,000 Up to $80,800
Married filing separately Up to $40,000 Up to $40,400
Head of household Up to $53,600 Up to $54,100
15% rate applies (taxable income thresholds) 2020 2021
Single $40,000 to $441,450 $40,400 to $445,850
Married filing jointly $80,000 to $496,600 $80,800 to $501,600
Married filing separately $40,000 to $248,300 $40,400 to $250,800
Head of household $53,600 to $469,050 $54,100 to $473,750
20% rate applies (taxable income thresholds) 2020 2021
Single Over $441,450 Over $445,850
Married filing jointly Over $496,600 Over $501,600
Married filing separately Over $248,300 Over $250,800
Head of household Over $469,050 Over $473,750

Unearned Income Medicare Contribution Tax (“Net Investment Income Tax”)

Amount of tax 2020 2021
Tax percentage 3.80% 3.80%
Applies to lesser of (a) net investment income or (b) modified adjusted gross income exceeding: 2020 2021
Individuals $200,000 $200,000
Married filing jointly $250,000 $250,000
Married filing separately $125,000 $125,000

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Certain information herein has been obtained from third party sources and, although believed to be reliable, has not been independently verified by Cutler Capital Management LLC and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy, completeness or timeliness of this information.

2021-01-05T18:14:03+00:00

Cutler Capital Management is an independent, Massachusetts-based, employee-owned investment firm. Our specialty is income-oriented, risk-adjusted investing. Founded in 2003, Cutler serves individual and institutional investors and is registered with the SEC as an investment advisor.

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