Tax Law Changes for the 2021 Tax Year
There are many tax changes for tax year 2021.
This is a summary of the most important of those provisions.
Your tax preparer will discuss with you the other relevant changes.
The Affordable Care Act. Please bring form 1095-A if you participated.
The personal exemption is no longer available.
Standard deduction has new limits:
Single: $12,550 Head of Household: $18,800 MFJ: $25,100
Additional over 65 or blind: $1,700 per person
IRA deductions remain $6,000 and $7,000 for those over age 50.
The standard mileage rate for business travel is 56 cents. Medical mileage is 16 cents. The charitable rate remains at 14 cent
Student loan interest is still deductible up to a maximum of $2,500.
The American Opportunity Credit has been made permanent for the first 4 years of college, up to $2,500 per student.
Lifetime learning credit per return is $2,000.
All Contribution of cash must be substantiated with dated receipts, cancelled checks, or credit card statements to prove the
deduction. Contributions of clothing and household items are limited to items documented in good or better condition.
Capital Gains are not taxed again this year if your taxable income is less than $80,000 MFJ $40,000 Single.
Deductible Taxes when itemizing: property, sales and state income taxes are limited to $10,000 for MFJ, Single, and Head of
Household. If you are filing Married Filing Separate you limited to $5,000.
Deductible Mortgage Interest: Interest on loans up to $750,000 or ($375,000 for MFS) on loans contracted after December
14, 2017. (The $1 million limit still applies to loans contracted before December 14, 2017 and closed by April 1, 2018).
Home Equity loan interest for improvements to home are deductible. Refinance mortgage loans – interest is deductible but
only if the refinanced amount isn’t greater than your old loan balance.
Miscellaneous Expenses: Tax preparation fees, investment fees, unreimbursed work expenses, job search expenses have been
eliminated unless you are member of the armed forces on active duty.
Moving expenses: Are no longer available unless you are a member of the armed forces on active duty and is due to
permanent change of station.
Qualified Business Income Deduction – Sole Proprietors, Partnerships, S – Corporations may be eligible for a 20% deduction
on net profits.