Key Tax Numbers for 2021

Every fall, the IRS announces changes to certain key financial figures for the upcoming year, based on the Consumer Price Index as of September 30. Here are a few of the highlights:

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), and most 457 plans remains unchanged at $19,500. The “catch-up” adjustment for those over age 50 also remains unchanged at $6,500. The total limit for those over age 50 remains $26,000.

The contribution limits for Traditional and Roth IRAs remains unchanged at $6,000. The “catch-up” adjustment for those over age 50 also remains at $1,000, thus making the total contribution limit to be $7,000 for those over age 50.

The IRS also announced that the basic Federal exclusion amount for decedents who die in 2021 will increase to $11,700,000 ($11,580,000 in 2020). The annual exclusion for gifts for 2021 will remain at $15,000.

The Social Security Administration announced there will be a 1.3% increase in Social Security benefits for 2021. The maximum amount of earnings subject to Social Security tax also will increase to $142,800.

The maximum Social Security benefit for a worker retiring at full retirement age in 2021 will be $3,113 per month.

On November 6, the Center for Medicare and Medicaid (CMS) announced premiums for Medicare Part B for 2021 will be increasing $3.90 a month to $148.50. The annual deductible for Medicare Part B beneficiaries is increasing $5 to $203.

Beneficiaries whose modified adjusted gross income exceeds $88,000 ($176,000 for married filing jointly) will pay a higher Part B premium. The amounts are tiered with a maximum Part B premium of $504.90 a month for beneficiaries whose modified gross income exceeds $500,000 ($750,000 for married filing Joint tax return).

Contact an EKS Associates advisor to discuss how these numbers impact your tax planning strategies.

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