Social Security tax
The amount of employees’ earnings that are subject to Social Security tax is capped for 2021 at $142,800 (up from $137,700 for 2020).
Deductions
- Section 179 expensing:
- Limit: $1.05 million (up from $1.04 million for 2020)
- Phaseout: $2.62 million (up from $2.59 million)
- Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:
- Married filing jointly: $329,800 (up from $326,600)
- Married filing separately: $164,925 (up from $163,300)
- Other filers: $164,900 (up from $163,300)
Business meals
Deduction for eligible business-related food and beverage expenses provided by a restaurant: 100% (up from 50%)
Retirement plans
- Employee contributions to 401(k) plans: $19,500 (unchanged from 2020)
- Catch-up contributions to 401(k) plans: $6,500 (unchanged)
- Employee contributions to SIMPLEs: $13,500 (unchanged)
- Catch-up contributions to SIMPLEs: $3,000 (unchanged)
- Combined employer/employee contributions to defined contribution plans: $58,000 (up from $57,000)
- Maximum compensation used to determine contributions: $290,000 (up from $285,000)
- Annual benefit for defined benefit plans: $230,000 (up from $225,000)
- Compensation defining a highly compensated employee: $130,000 (unchanged)
- Compensation defining a “key” employee: $185,000 (unchanged)
Other employee benefits
- Qualified transportation fringe-benefits employee income exclusion: $270 per month (unchanged)
- Health Savings Account contributions:
- Individual coverage: $3,600 (up from $3,550)
- Family coverage: $7,200 (up from $7,100)
- Catch-up contribution: $1,000 (unchanged)
- Flexible Spending Account contributions:
- Health care: $2,750 (unchanged)
- Dependent care: $5,000 (unchanged)
These are only some of the tax limits that may affect your business and additional rules may apply. If you have questions, please contact us.
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If you want to talk to us about your personal tax situation, please email us via our contact page and visit our website at www.ablonco.com.
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