The IRS Just Released New 2021 Tax Brackets. Here's What They Mean.
Casey Bond ·Money, Home and Living Reporter, Huff Post Tue, October 27, 2020
You might still be focused on surviving 2020, but when it comes to taxes, it doesn’t hurt to plan ahead.
This month, the IRS released updates to the tax code for tax year 2021. Though actual tax brackets remained the same (10%, 12%, 22%, 24%, 32% and 35%), income limits for each bracket were increased to account for inflation. The standard deduction for 2021 was also increased.
These changes will affect how much you pay when you file income taxes in 2022. Here’s a look at the 2021 tax brackets and other changes to personal taxes next year.
Tax Brackets For Tax Year 2021
Single filers:
10%: Up to $9,950
12%: Income of $9,951 to $40,525
22%: Income of $40,526 to $86,375
24%: Income of $86,376 to $164,925
32%: Income of $164,926 to $209,425
35%: Income of $209,426 to $523,600
37%: Income over $523,600
Married, filing jointly:
10%: Up to $19,900
12%: Income of $19,901 to $81,050
22%: Income of $81,051 to $172,750
24%: Income of $172,751 to $329,850
32%: Income of $329,851 to $418,850
35%: Income of $418,851 to $628,300
37%: Income over $628,300
Married, filing separately:
10%: Up to $9,950
12%: Income of $9,951 to $40,525
22%: Income of $40,526 to $86,375
24%: Income of $86,376 to $164,925
32%: Income of $164,926 to $209,425
35%: Income of $209,426 to $314,150
37%: Income over $314,150
Heads of household:
10%: Up to $14,200
12%: Income of $14,201 to $54,200
22%: Income of $54,201 to $86,350
24%: Income of $86,351 to $164,900
32%: Income of $164,901 to $209,400
35%: Income of $209,401 to $523,600
37%: Income over $523,600
Wondering about tax brackets for 2020? Take a look at them here.
What Do The 2021 Tax Brackets Mean?
Tax brackets are a way to ensure that the lowest-earning Americans aren’t forced to pay the same tax rate as higher earners.
The U.S. follows a progressive tax system, meaning that portions of your income are taxed at different rates. So if you’re a single filer earning $80,000 per year, for example, you don’t actually pay 22% on that income.
Instead, the first $9,950 of income is taxed at 10%. The next $9,951 to $40,525 of income is taxed at 12%. The last $39,425 of your income (income above $40,525) is what would be taxed at the highest rate of 22%.
Read full article here: https://www.yahoo.com/huffpost/2021-tax-brackets-irs-192819839.html?.tsrc=daily_mail&uh_test=1_02
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