As 2020 becomes hindsight, 2021 ushers in several new laws. They may not all impact everyone; however, here is a rundown for those who want to know.
The license plate replacement law will eventually impact every North Carolina vehicle owner. Starting with the new year, any regular license plate which is at least seven years old on the vehicle registration renewal date, will be replaced at no additional cost. According to the North Carolina Division of Motor Vehicles, approximately 2.4 million license plates will be switched during 2021 alone.
In addition, around 500,000 aging specialty or vanity plates will be replaced in 2022, at renewal time. The plans are to follow through with a 2019 mandate for license plate replacements since faded plates are not easily read by police or machines.
Friday, Jan. 1 brought payroll changes related to some states and the District of Columbia. Those included minimum wage changes, updated paid sick leave laws, as well as new state unemployment wage bases.
In North Carolina, the minimum wage remains at $7.25 per hour, which matches what federal minimum wage has been for 11 years. The minimum tipped wage is $2.13, which means a person’s tips and hourly wage should still meet the $7.25 per hour minimum. In recent years, bills to increase the minimum wage have been filed at the state level, yet no legitimate changes have developed.
More than 20 states and the District of Columbia are raising their hourly minimum wage in 2021. Some were effective Jan. 1, while others will change later in the year.
According to onpay.com, the federal government modified the Social Security wage base effective Friday, Jan. 1, too. In 2020, that base was $137,700, but it increased to $142,800 for 2021.
The federal government also made some changes to health savings accounts HSA limits for 2021. Individual HSA limits went up from $3,550 to $3,600, while family HSA increased from $7,100 to $7,200. For anyone 55 years and up, the HSA catch-up contribution remains at $1,000 for the new year. Meanwhile, the FSA or health flex spending account limit and dependent care limit remained at $2,750 and $5,000, respectively.
Allowable contributions to IRA’s did not change for 2021. A traditional IRA is still maxed at $6,000, as is a Roth IRA. The employee catch-up contribution for those 50 and older by year-end is $1,000.
Federal mileage reimbursements actually decreased slightly on Friday, Jan. 1. Reimbursement for business miles driven went from $0.575 to $0.56. Mileage reimbursement for moving is no longer allowed. Monthly parking allowances also remained the same at $270.
For those who may be concerned about loftier income guidelines, Forbes recently shared the official 2021 estate and gift tax limits announced by the Internal Revenue Service.
The estate and gift tax exemption has been increased to $11.7 million per individual, up from $11.58 million in 2020. So, if you are wondering, an individual may leave $11.7 million to heirs and pay no federal estate or gift tax, married couples can shield $23.4 million.
There is a possibility some of this will change after Joe Biden takes the oath of office Wednesday, Jan. 20. If you are concerned about estate and gift tax exemption amounts decreasing, start a gifting plan is now. A couple of years ago, the IRS announced it would not look for lifetime gifts if or when the exemption is lowered.
The 2021 annual gift exclusion amount stays static at $15,000, the IRS announcement said. Therefore, one may give away $15,000 to as many people as you like without federal gift tax consequences. For those who are doubly generous, spouses may each make gifts of $15,000 gifts.