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2021 Federal Tax Information*

A reference guide for individuals


The Internal Revenue Service (IRS) declares tax rate schedules, tax tables, and cost-of-living adjustments for certain tax items and provisions each year.


Additionally, federal law provides for inflation adjustments to many important categories used in personal, business, and financial planning — including tax brackets, deductions, exemptions, retirement plan contributions, Social Security benefits, and Medicare premiums.


This document provides the current information on 2021 tax-related amounts and provides direct web access to IRS references, resources, and other financial information.


NOTE: It is easy to save this URL to your web favorites for easy access anytime — just as you would any other favorite website. This digital resource guide is easily viewable on any mobile device.


This information is current as of December 28, 2020. Please refer to www.IRS.gov for the most up-to-date information, as changes could occur after this date.



individual

2021 Federal Individual Income Tax Rates

If filing status is Single

If filing status is Married Filing Jointly or Surviving Spouses

If filing status is Married Filing Separately

If filing status is Head of Household

If filing status is for Estates and Trusts


2020 Federal Individual Income Tax Rates

If filing status is Single

If filing status is Married Filing Jointly or Surviving Spouses

If filing status is Married Filing Separately

If filing status is Head of Household

If filing status is for Estates and Trusts


individual

2021 Capital Gains and Dividend Income Brackets



2020 Capital Gains and Dividend Income Brackets



investment

3.8% Net Investment Income Tax

Imposed on the lesser of net investment income or modified adjusted gross income (MAGI) that exceeds the threshold amount shown:




family

Child Tax Credit

$2,000 (2021) per child under the age of 17 at end of year, reduced by $50 for every $1,000 of adjusted gross income (AGI) above phaseout:



Note: The Child Tax Credit is a partially refundable credit. This means that even if the taxpayer has no tax liability, as much as $1,400 of the credit per child can be refunded to the taxpayer.



Adoption Credit



Standard Deductions and Personal and Dependency Exemptions



  • 1 Taxpayers who are both age 65 and blind may claim twice the amount indicated as their additional standard deduction.


Alternative Minimum Tax

Individuals: The alternative minimum tax (AMT) is a tax designed to reduce the favorable tax treatment provided by certain income exclusions and deductions or when income is taxable. Individual taxpayers pay the greater of (1) the AMT or (2) the regular income tax.


Effective in 2018 and later years, the alternative minimum tax has been repealed for C Corporations.



  • 2 The kiddie tax exemption amount cannot exceed the exemption amount for a single taxpayer.


Kiddie Tax


Unearned income of children under 19 (and dependent full-time students up to the age 24) is taxable at parents’ tax rate if higher than child’s.



education

Tax Benefits for Education

AGI used may be subject to modifications.


  • ** NOTE: under the Consolidated Appropriations Act, 2021, the phaseout ranges were unified for the Lifetime Learning Credit and the American Opportunity Tax Credit.


business

Corporate Income Tax Rate

The corporate income tax rate is a flat 21% for all corporations. There is no special rate for personal service corporations.



Deduction for Pass-Through Entities

Deduction equal to the lesser of 20% of domestic qualified business income from a pass-through entity or 20% of taxable ordinary income.


Additional limitations apply if taxable income exceeds:



The deduction is phased out for pass-throughs engaged in specialized service trades or businesses based on taxable income.





long term care

Qualified Long Term Care Insurance Premiums

Qualified long term care insurance premiums qualify as medical expense itemized deductions, subject to limitations based on the insured’s age.




health savings account

Health Savings Accounts


  • 3 If both spouses are in age range
  • *** Not subject to inflation adjustment


gifts and estate tax

Federal Gift and Estate Tax Amounts



Federal Gift, Estate Tax, and GST Rates



retirement accounts

Qualified Plan Benefit, Contribution, and Compensation Limits


  • 4 In addition, the maximum annual addition cannot exceed 100% of an employee’s compensation for the year. An employee’s elective deferrals are included in computing the contribution limit and are included in compensation.
  • *** Not subject to inflation adjustment.


IRA and Employee Contribution Limits


  • 5 Also applies to salary reduction SEPs (SARSEPs)
  • *** Not subject to inflation adjustment


IRA and Roth IRA Phaseout Ranges



  • 6 Phaseout range is not subject to an annual cost-of-living adjustment.


Comparing Traditional and Roth IRAs

Topic Traditional IRA Roth IRA
Income limit Deductible contributions: Limits apply if individual or spouse is an active participant in employer plan (see above)
Non-deductible contributions: None
Yes (see phaseout table above)
Deductibility of contributions Non-participants in an employer plan may deduct the full amount of the allowable contribution. Deduction for participants in a qualified plan (or spouse of a participant) may be limited (see above). Not deductible
Taxation of distributions Taxable unless non-deductible contributions were made. Non-deductible contributions are allocated prorated to each distribution until fully recovered. If under 59½, 10% early withdrawal penalty tax applies unless the distribution qualifies for one of the following exceptions:
  • Death
  • Disability
  • Substantially equal periodic payments
  • First-time home purchase (limited to $10,000 lifetime)
  • Qualified higher education expenses
  • Qualifying unreimbursed medical expenses
  • Health insurance if unemployed
  • Qualified reservist distributions
  • Birth or adoption of a child (up to $5,000)
  • Coronavirus-related distributions
Contributions distributed tax-free first. Distributed earnings are tax free if account is held 5 years and distribution is made:
  • On or after age 59½
  • At or after death
  • If disabled
  • For a first home purchase (limited to $10,000 lifetime)
If under 59½, taxable earnings are subject to the 10% early withdrawal penalty tax unless the distribution qualifies for one of the following exceptions:
  • Death
  • Disability
  • Substantially equal periodic payments
  • First-time home purchase (limited to $10,000 lifetime)
  • Qualified higher education expenses
  • Unreimbursed medical expenses
  • Health insurance if unemployed
  • Qualified reservist distributions
  • Birth or adoption of a child (up to $5,000)


social security

Social Security




Social Security (OASDI) tax rate: Employee and employer: 6.2%; self-employed: 12.4%

Health Insurance (HI tax rate): Employee and employer: 1.45%; self-employed: 2.9%

Employees and self-employed pay an additional 0.9% if earned income exceeds the following: Married Filing Jointly: $250,000; Single $200,000, Married Filing Separately $125,000.




medicare

Medicare Information


  • 7 Applies to most enrollees. If AGI exceeds a certain amount, the premium is increased. Premium amounts do not include late enrollment penalty.
  • *** Not subject to inflation adjustment.


beneficiaries

Uniform Lifetime Table

Retired qualified plan participants and IRA owners generally must begin taking distributions by April 1st of the year after the year in which they turn age 72. The annual required minimum distributions (RMDs) are based upon the joint life expectancy of the participant/IRA owner and a hypothetical beneficiary who is 10 years younger. These factors are found in the Uniform Lifetime Table.


If the sole designated beneficiary on the account is a spouse who is more than 10 years younger, their RMDs are based on an IRS joint life expectancy. This table can be found in Appendix B of IRS Publication 590-B and produces a smaller RMD than the Uniform Lifetime Table.



For Use By: Unmarried Owners, Married Owners whose spouses are not more than 10 years younger, and Married Owners whose spouses are not the sole beneficiaries of their IRAs.


Note – Do not use this table for inherited IRAs and qualified plan accounts that require an annual distribution. The following Single Life Table is used for those accounts.



Single Life Expectancy For Use by Eligible Designated Beneficiaries

Eligible designated beneficiaries are surviving spouses, a child of the IRA owner or participant who has not attained the age of majority, a beneficiary who is disabled or chronically ill, or a beneficiary who is not more than 10-years younger than the IRA owner or participant.



Contact your financial professional directly for any additional information.
  • * The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.