The Internal Revenue Service (IRS) recently announced new tax rules for 2021 that will affect individuals and businesses alike. The new rules are designed to simplify the tax filing process and provide more clarity for taxpayers.
For individuals, the new rules include an increase in the standard deduction, an expansion of the child tax credit, and a new tax credit for employers who provide paid family and medical leave. The standard deduction has been increased to $12,550 for single filers and $25,100 for married couples filing jointly. This is an increase of $200 and $400, respectively, from the 2020 tax year.
The child tax credit has also been expanded to provide up to $3,000 per qualifying child under the age of 17. This is an increase of $1,000 from the 2020 tax year. Additionally, employers who provide paid family and medical leave to their employees can now claim a tax credit of up to 25% of the wages paid to employees for up to 12 weeks of leave.
For businesses, the new rules include an increase in the Section 179 deduction, an expansion of the Work Opportunity Tax Credit, and a new tax credit for employers who provide paid family and medical leave. The Section 179 deduction has been increased to $1 million, an increase of $500,000 from the 2020 tax year. This deduction allows businesses to deduct the cost of certain business assets from their taxable income.
The Work Opportunity Tax Credit has also been expanded to provide up to $9,600 for employers who hire certain individuals, such as veterans, ex-felons, and individuals receiving public assistance. Additionally, employers who provide paid family and medical leave to their employees can now claim a tax credit of up to 25% of the wages paid to employees for up to 12 weeks of leave.
Overall, the new tax rules for 2021 are designed to simplify the tax filing process and provide more clarity for taxpayers. Individuals and businesses alike can benefit from the new rules, which are designed to provide tax relief and encourage economic growth.