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All the New Numbers You Need To Know for Planning Ahead on Taxes

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If you’re like many people, you’ve always known the importance of planning for the future, but the COVID-19 pandemic has further underlined this need. Your federal taxes aren’t due until May 17th this year, but it’s never too early to start looking ahead.

See: The 6 Most Important Tax Deductions You Need to Claim

The IRS has released 2021 tax numbers, so you know where you stand in key categories like tax rates and retirement plan contributions. This allows you to know exactly how much you’ll be taxed and ensure your retirement plan contributions don’t exceed the maximum amount. This is important because you don’t want to be hit with an unexpected tax bill or penalties that could’ve been easily avoided.

Take a look at the details you need to get your finances in order far ahead of tax day.

Last updated: Apr. 29, 2021

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401(k) Plans

In 2021, the annual contribution limit for 401(k), 403(b) and most 457 plans will remain at $19,500. You’re able to update your per-paycheck contribution at any time, so keep an eye on the total amount of money you’ve saved for the year, so you can make adjustments if necessary.

Also worth noting, the 401(k) catch-up contribution limit for workers ages 50 and up will remain at $6,500. You can make this extra contribution even if you turn 50 on Dec. 31, 2021.

Related: 27 Best Strategies To Get the Most Out of Your 401(k)

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SEP IRAs and Solo 401(k) Plans

If you’re self-employed or own a small business, your SEP IRA or solo 401(k) contribution limits will realize a small bump in 2021. Based a percentage of your salary, you’re able to contribute $58,000 in 2021 — up from $57,000 in 2020. Additionally, the compensation limit used as part of the savings calculation will rise to $290,000 in 2021 — up from $285,000 in 2020.

Which Is Better? 401(k) vs. Roth 401(k)

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Individual Retirement Accounts

The maximum contribution to your Individual Retirement Account — including pretax, Roth or a combination — will hold steady at $6,000. The catch-up contribution limit will also remain unchanged at $1,000.

It’s also worth noting that you can continue making 2021 contributions to your IRA until April 15, 2022. This gives you extra time to meet contribution limits if you fall behind during the year.

Read More: See What a $100K Salary Looks Like After Taxes in Your State

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Tax Rates for Single Filers

Here’s a look at the tax rates you’ll be subject to as a single filer in 2021.

  • 37% for incomes over $523,600
  • 35% for incomes over $209,425
  • 32% for incomes over $164,925
  • 24% for incomes over $86,375
  • 22% for incomes over $40,525
  • 12% for incomes over $9,950
  • 10% for incomes of $9,950 or less

See: 25 Downsides of 401(k)s That You’ve Never Heard Of

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Tax Rates for Married Couples Filing Jointly

These are the tax rates you’ll face in 2021 as a married couple filing together.

  • 37% for incomes over $628,300
  • 35% for incomes over $418,850
  • 32% for incomes over $329,850
  • 24% for incomes over $172,750
  • 22% for incomes over $81,050
  • 12% for incomes over $19,900
  • 10% for incomes of $19,900 or less

Here They Are: The Top 10 Most Expensive States To File Taxes

Save for Your Future
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Tax Rates for Married Couples Filing Separately

If you’re part of a married couple filing separately, you’ll be subject to these tax rates in 2021.

  • 37% for incomes over $523,600
  • 35% for incomes over $209,425
  • 32% for incomes over $164,925
  • 24% for incomes over $86,375
  • 22% for incomes over $40,525
  • 12% for incomes over $9,950
  • 10% for incomes of $9,950 or less

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