Many tax-related limits that impact businesses are annually indexed for inflation, and many have increased for 2021, although a few remained the same due to low inflation. We provide an overview of those that may be important to you and your business.
Deductions
Section 179 expensing:
- Limit: $1.05 million (up from $1.04 million)
- Phaseout: $2.62 million (up from $2.59 million)
Income-based phase-ins for certain limits on the Sec. 199A qualified business income deduction:
- Married filing jointly: $329,800-$429,800 (up from $326,600-$426,600)
- Other filers: $164,900-$214,900 (up from $163,300-$213,300)
Retirement plans
- Employee contributions to 401(k) plans: $19,500 (no change)
- Catch-up contributions to 401(k) plans: $6,500 (no change)
- Employee contributions to SIMPLEs: $13,500 (no change)
- Catch-up contributions to SIMPLEs: $3,000 (no change)
- Combined employer/employee contributions to defined contribution plans (not including catch-ups): $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 (no change)
- Compensation defining “highly compensated employee”: $130,000 (no change)
- Compensation defining “key employee”: $185,000 (no change)
Other employee benefits
- Qualified transportation fringe-benefits employee income exclusion: $270 per month (no change)
- 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 (no change)
- Flexible Spending Account contributions:
- Health care: $2,750 (no change)
- Dependent care: $10,500 (up from $5,000)
At Abacus CPAs, our focus is you! We believe that our employees and clients deserve to interact in an environment that fosters growth, trust, and confidence. Our team focuses on tax, accounting, audit, and business consulting to partner with you and your business. Abacus professionals provide leadership by relentlessly pursuing the best guidance possible so those we serve can make smarter decisions.
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