This article originally appeared on GOBankingRates. Michael Keenan contributed to the reporting for this article. 2 5 Tax Changes for the Tax Year 2021 2.1 Inflation Adjustments to the Standard Deduction 2.2 Expanded Child Tax Credit 2.3 Charitable Contribution Deduction Expansion 2.4 IRA Required Minimum Distributions 2.5 Unemployment Benefits Are Taxable Again 2.6 Other Tax Law Changes in 2021 2. 2021-06, August 16, 2021, Tax Law Changes from the 2021 Regular Legislative Session. In addition, eligible taxpayers can claim qualifying child and dependent care expenses of up to: 8,000 for one qualifying child or dependent, up from 3,000 in prior years, or 16,000 for two or more qualifying dependents, up from 6,000 before 2021. What are the new tax changes for 2021 For your 2021 tax return, the standard deduction is now 12,550 for single filers (an increase of 150) and 25,100 for married couples filing jointly (an increase of 300). Guns and 32 Other Things You Definitely Do NOT Need To Buy During the Coronavirus Pandemic This is a list, not an explanation, of federal tax changes effective in 2021. For 2021, the top credit percentage of qualifying expenses increased from 35 to 50. For example, in 2021, your employer can provide you with up to $270 of transportation benefits each month, such as free parking or a public transportation pass, without it increasing your taxable income.Īre You Spending More Than the Average American on 25 Everyday Items?ģ0 Important Money Habits for Your Financial Future In addition, the child tax credit increases from 2,000 to 3,000 for children age 6 through 17 and up to 3,600 for children under 6. However, there are certain exceptions known as fringe benefits. Transportation Fringe Benefit Limit Remains the SameĪs a taxpayer, you’re typically required to include not only any cash payments you receive from your employer but also any other benefits your employer pays on your behalf when you report your taxable income to the IRS. Here are the minimum income levels for the top tax brackets for each filing status in 2021: Single: 523,601 (up from 518,401 in 2020) Head of Household: 523,601 (up from 518,401 in 2020.
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