The IRS just released the updated income tax brackets for 2021. These updates are meant to reflect inflation and they are set on a marginal basis, meaning that different portions of your income will be taxed at different rates depending on your income level. Just as a quick review, the tax brackets are set at 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
These tax rates will not affect your 202o tax returns, it will only affect your 2021 returns that you will file at the beginning of 2022. So here is the breakdown of the new marginal rate income tax brackets for 2021.
- To fall into the 37% bracket you will need to make $523,600 in taxable income or $628,300 if married and filing jointly.
- If you are single and make $209,425 or $418,850 filing jointly then you are placed in the 35% bracket.
- To qualify for the 32% bracket you will need to make $164,925 or ,if you file jointly, $329,850.
- If you make $86,375 as a single person, you will be in the 24% income tax bracket while those that file jointly will have to have taxable income of $172,750.
- With an income of $40,525 or more, you will fall into the 22% bracket. For married couples this means you will need an income of $81,050 to be placed in this bracket.
- Finally the 12% bracket is for those with an income above $9,950, or $19,900 jointly, while the 10% bracket must have na income below $9,950 (or $19,900 jointly).
Another piece of good new that was released with these updates is that the standard deduction for 2021 has increased $150 from $12,400 to $12,550 for singles. For married couples the 2021 standard deduction has increased $300 from $24,800 to $25,100. So that means you get to have a little more of your income that is not subject to tax next year.
For more info on tax rates and to see how your personal taxes may be affected please reach out to Trailhead Tax Center by email [email protected] or call 360-553-7907.
