The Internal Revenue Service has published the annual inflation adjustments for more than 60 tax provisions for tax year 2021. These include tax rate schedules and other tax changes and these are detailed in The minimum additional tax for failure to file a tax return within 60 days of the date has been raised under the Consolidated Appropriation Act for 2020. For returns due after Dec. 31, 2019, additional tax is $435 or 100 percent of the amount of tax due, whichever is less, an increase from $330. This amount will be adjusted for inflation in future tax years.
Among important changes are the increase in the standard deduction. For couples filing jointly, the deduction rises to $25,100, up $300 from 2020. The standard deduction for single taxpayers and married individuals filing separately increases to $12,550, an increase of $150, and for heads of household it will be $18,800, a rise of $150.
Personal exemptions were eliminated under the Tax Cuts and Jobs Act and remain zero. However, that legislation also ended limits on itemized deductions.
The Alternative Minimum Tax exemption amount for tax year 2021 is $73,600, phasing out at starting at $523,600. The exemption for married couples married filing jointly is $114,600 and begins to phase out at $1,047,200. The maximum Earned Income Credit amount is $6,728 for qualifying taxpayers with three or more qualifying children, up from $6,660 for tax year 2020. A table providing maximum Earned Income Credit amount for other categories, income thresholds and phase-outs is included in the revenue procedures.