We sat down with Ryan J. Beal to get the inside scoop on how 2021 tax codes may have shifted – and what they could mean for your business. Let’s see what he had to say.
Q: What are some important differences in 2021 tax codes compared to last year’s?
A: There are 2 noticeable differences in the 2021 tax code. The first is a “real” difference and the second being a “perceived” difference. In real terms, 2021 is seeing an increase in the tax bracket limits, allowable deduction limits, and retirement savings limits, which reflect inflation. For example, to reach the 24% tax bracket for married people filing jointly, last year it would have required $171,050 in combined income. In 2021, the 24% bracket begins at $172,751 — not much of a change, but a change nonetheless. The bigger change is NOT happening. There was fear, or an analysis done, saying there would be a “stealth tax increase” in 2021. However, that just isn’t the case. Any increase in tax liability is reserved for those who choose not to buy health insurance. Therefore, they lose the health insurance premium deduction. With the removal of the individual mandate penalties in the ACA, the number of people making this choice is bound to rise. But rest assured, every tax bracket change is for the better.
Q: What could 2021 tax code changes mean for your clients?
A: 2021 is proving to be a pivotal year to plan for your business and your family. While there are political climate unknowns, we cannot yet predict what tax legislation will come from the newly seated federal government. Several KNOWN changes ARE coming in 2022 that can affect your business planning. The R&D expense 5-year amortization requirement begins in 2022. This means you can no longer write off 100% of your innovation expenses in the year they occur. While other “full expensing” provisions begin to roll back (at 20% per year) beginning next year as well, all other tax law changes from the Tax Cuts and Jobs Act are set to expire in 2025.
Q: Do you have any advice on how your clients should prepare for these changes?
A: Based on these coming changes, 2021 is a fantastic year to invest in your business. You will get the maximum tax benefit from your commitment to growth and you can truly be set up to continue to capitalize on that investment in the years to come!
Ryan J. Beal, CLCS is the director of financial services and commercial risk advisor for Overmyer Hall Associates. Connect with Ryan on LinkedIn if you have any further questions.
About Overmyer Hall Associates
Overmyer Hall Associates is one of the fastest growing agencies in the country, quickly becoming one of the largest property and casualty insurance agencies in Central Ohio. Overmyer Hall Associates provides clients with insurance and risk management, specializing in Business Insurance, Surety Bonding, and Home & Auto Insurance. Since its founding in 2011, the firm has been awarded Columbus Business First’s "Fast 50" and "Best Places to Work" awards, the IIABA’s “Best Practices Agency” recognition, Columbus CEO Magazine’s “Best Insurance Broker” and the Columbus Young Professionals Club’s “Wonderful Workplace for Young Professionals” award. www.oh-ins.com