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2021 Tax Planning

The new year brings new changes to some of the federal tax figures used in financial planning. Here are some highlights:

  • The standard deduction has increased slightly in 2021 due to a cost of living adjustment to $25,100 for married joint filers and $12,550 for singles.

  • The federal estate and gift tax exclusion amount has increased from $11,580,000 to $11,700,000 for 2021, although the annual gift tax exclusion remains at $15,000.

  • Contribution amounts for qualified plans and IRAs generally remain at 2020 levels. For instance, the salary deferral limit for contributions to 401(k), 403(b), and governmental 457(b) plans remains at $19,500 for 2021.

  • The catch-up contribution to 401(k), 403(b), and governmental 457(b) plans also remains at $6,500. Therefore, a participant in a 401(k), 403(b), or governmental 457(b) plan who is age 50 or over may defer up to $26,000 from their salary into the plan in 2021.

  • The 2021 IRA contribution limit also remains at the 2020 level of $6,000. (Remember that because the SECURE Act eliminated the age 70½ age limit for traditional IRA contributions, clients of any age may contribute to an IRA if they have earned income).

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Additional Helpful Resources

To help get where you want to be, it’s critical to know where you are right now. Use this quick checklist to assess different parts of your financial life and note any major changes, opportunities, or questions you have.

This helpful chart is updated with the latest 2021 figures.

To help you stay on top of all the changes, call 817-462-4200 any time to schedule an appointment.