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.
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)
- 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)
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