2020-2021 Federal Income Tax Brackets And Tax Rates

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Wondering how much you’ll pay in federal income taxes when you file in April? Much of this depends on your tax bracket.

Federal tax brackets help determine how much in taxes you pay each year on your income. The more money you make, the higher your tax bracket. Your tax bracket depends on your taxable income and your filing status: single, married filing jointly, married filing separately or head of household.

For the 2021 tax year – the income taxes that you must file on or before April 15, 2022 – there are seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%. If your income is high enough to land you in the 24% bracket, parts of it will be taxed at 10%, 12%, 22% and 24%. If your income is only high enough to land you in the 12% bracket, parts of your income will be taxed at 10% and the rest at 12%.

To determine your federal income tax bracket, you’ll need to know your gross income for the year and your filing status.

Read on to find complete tables showing the tax brackets and federal income tax rates for the 2021 tax year.

What Are Federal Income Tax Brackets?

Why does the United States have different tax brackets for different taxpayers? It’s about the difference between regressive and progressive taxes.

Regressive taxes are the same for all taxpayers, regardless of their income. The criticism of regressive taxes is that they place more of a financial burden on taxpayers earning less money. Consider a state sales tax of 6.25% on all purchases, a regressive tax. This tax hit is more of a struggle for lower-income consumers than it is for wealthier ones.

Federal income tax, though, is known as a progressive tax, meaning that it takes a larger percentage of income from high-income taxpayers than from low-income ones. Consider how federal income taxes work: If you earn more money, you’ll be in a higher tax bracket and pay a larger percent of your yearly income in taxes. Economists generally consider progressive taxes to be fairer because they place a greater financial burden on taxpayers who can more easily afford that burden.

Say you are a single taxpayer whose taxable income in 2021 was $39,000. You’d fall in the 12% tax bracket. What’s interesting, though, is that your entire gross income for 2021 wouldn’t be taxed at that 12% rate.

Instead, you would be taxed at 10% of the first $9,950 of your gross income because that is the maximum for the 10% tax bracket for tax year 2021. You’d then be taxed at 12% for any of your gross income above $9,950.

It can get more complicated if your gross income pushes you into even higher tax brackets. Say your gross income was $50,000 for 2021. You’d then fall into the 22% tax bracket. Again, though, your first $9,950 of gross income for the 2021 tax year would be taxed at 10%. Any income from $9,951 – $40,525 would be taxed at 12% – the second federal income tax bracket – and the remainder of your income, up to $50,000, would be taxed at 22%.

What Are The 2021 Tax Year Federal Tax Brackets And Marginal Tax Rate?

Single Taxpayers

Taxable Income	Marginal Tax Rate	You Owe
$0 – $9,950	10%	10% of your income
$9,950 – $40,525	12%	$995 plus 12% of the amount over $9,950
$40,525 – $86,375	22%	$4,664 plus 22% of the amount over $40,525
$86,375 – $164,925	24%	$14,751 plus 24% of the amount over $86,375
$164,925 – $209,425	32%	$33,603 plus 32% of the amount over $164,925
$209,425 – $523,600	35%	$47,843 plus 35% of the amount over $209,425
More than $523,600	37%	$157,804.25 plus 37% of the amount over $523,600

 

Married Filing Jointly

Taxable Income	Marginal Tax Rate	You Owe
$0 – $19,900	10%	10% of taxable income
$19,900 – $81,050	12%	$1,990 plus 12% of the amount over $19,900
$81,050 – $172,750	22%	$9,328 plus 22% of the amount over $81,050
$172,750 – $329,850	24%	$29,502 plus 24% of the amount over $172,750
$329,850 – $418,850	32%	$67,206 plus 32% of the amount over $329,850
$418,850 – $628,300	35%	$95,686 plus 35% of the amount over $418,850
More than $628,300	37%	$168,993.50 plus 37% of the amount over $628,300

 

Married Filing Separately

Taxable Income	Marginal Tax Rate	You Owe
$0 to $9,950	10%	10% of taxable income
$9,951 to $40,525	12%	$995 plus 12% of the amount over $9,950
$40,526 to $86,375	22%	$4,664 plus 22% of the amount over $40,525
$86,376 to $164,925	24%	$14,751 plus 24% of the amount over $86,375
$164,926 to $209,425	32%	$33,603 plus 32% of the amount over $164,925
$209,426 to $314,150	35%	$47,843 plus 35% of the amount over $209,425
More than $314,151	37%	$84,496.75 plus 37% of the amount over $314,150

 

Head Of Household

Taxable Income	Marginal Tax Rate	You Owe
$0 to $14,200	10%	10% of taxable income
$14,201 to $54,200	12%	$1,420 plus 12% of the amount over $14,200
$54,201 to $86,350	22%	$6,220 plus 22% of the amount over $54,200
$86,351 to $164,900	24%	$13,293 plus 24% of the amount over $86,350
$164,901 to $209,400	32%	$32,145 plus 32% of the amount over $164,900
$209,401 to $523,600	35%	$46,385 plus 35% of the amount over $209,400
More than $523,601	37%	$156,355 plus 37% of the amount over $523,600

 

2022 Federal Tax Brackets And Marginal Tax Rate

The IRS tinkers with federal income tax brackets each year. Here are what the tax brackets will be for the 2022 tax year, for the income taxes you must file in April of 2023.

Single Taxpayers

Taxable Income	Marginal Tax Rate	You Owe
$0 to $10,275	10%	10% of your income
$10,276 to $41,775	12%	$1,027.50 plus 12% of the amount over $10,275
$41,776 to $89,075	22%	$4,807.50 plus 22% of the amount over $41,775
$89,076 to $170,050	24%	$15,213.50 plus 24% of the amount over $89,075
$170,051 to $215,950	32%	$34,647.50 plus 32% of the amount over $170,050
$215,951 to $539,900	35%	$49,335.50 plus 35% of the amount over $215,950
More than $539,901	37%	$162,718 plus 37% of the amount over $539,900

 

Married Taxpayers Filing Jointly

Taxable Income	Marginal Tax Rate	You Owe
$0 to $20,500	10%	10% of your income
$20,550 to $83,550	12%	$2,055 plus 12% of the amount over $20,550
$83,551 to $178,150	22%	$9,615 plus 22% of the amount over $83,550
$178,151 to $340,100	24%	$30,427 plus 24% of the amount over $178,150
$340,101 to $431,900	32%	$69,295 plus 32% of the amount over $340,100
$431,901 to $647,850	35%	$98,671 plus 35% of the amount over $431,900
More than $647,851	37%	$174,253.50 plus 37% of the amount over $647,850

 

Married Taxpayers Filing Separately

Taxable Income	Marginal Tax Rate	You Owe
$0 to $10,275	10%	10% of your income
$10,276 to $41,775	12%	$1,027.50 plus 12% of the amount over $10,275
$41,776 to $89,075	22%	$4,807.50 plus 22% of the amount over $41,775
$89,076 to $170,050	24%	$15,213.50 plus 24% of the amount over $89,075
$170,051 to $215,950	32%	$34,647.50 plus 32% of the amount over $170,050
$215,951 to $323,925	35%	$49,335.50 plus 35% of the amount over $215,950
More than $323,926	37%	$87,126.75 plus 37% of the amount over $323,925

 

Head Of Household

Taxable Income	Marginal Tax Rate	You Owe
$0 to $14,650	10%	10% of your income
$14,651 to $55,900	12%	$1,465 plus 12% of the amount over $14,650
$55,901 to $89,050	22%	$6,415 plus 22% of the amount over $55,900
$89,051 to $170,050	24%	$13,708 plus 24% of the amount over $89,050
$170,051 to $215,950	32%	$33,148 plus 32% of the amount over $170,050
$215,951 to $539,900	35%	$47,836 plus 35% of the amount over $215,950
More than $539,901	37%	$161,218.50 plus 37% of the amount over $539,900

 

How Do I Calculate How Much I Owe?

If you were a single filer who made $86,000 in taxable income after deductions in 2021, you would pay a total of $14,668.50 in taxes.

Wondering how we got there? Take a look at the chart for 2021 single tax filers above and follow along below:

With a taxable income of $86,000, your income falls into the 22% tax bracket for federal taxes. But that doesn’t mean the whole $86,000 will be taxed at 22%. Just a portion of it will. The other portions will be taxed at 10% or 12%.

Here’s a breakdown of how much each portion of your income will be taxed:

• $9,950 of your income will be taxed at 10%.
• $30,575 will be taxed at 12%. This is the portion of your income that falls between $9,950 – $40,525. To get this number, subtract the $9,950 from $40,525.
• $45,475 of your income will be taxed at 22%. This is the portion of your income that falls between $40,525 – $85,525. To get this number, add the previously taxed portions of your income – $9,950 and $30,575 – and subtract that figure from your total taxable income of $86,000.

Now that you know what parts of your income get taxed in each bracket, you can see how much you’ll owe in taxes total.

To do that, carry the total from the previous tax bracket and add it to the percentage you’re taxed in the next bracket, then carry that total over. Do this until you reach your tax bracket (in this example, 22%).

• Taxes owed in 10% bracket = $9,950 x .10 = $995
• Taxes owed in 12% bracket = $30,575 x .12 = $3,669 + $995 (from previous bracket) = $4,664
• Taxes owed in 22% bracket = $45,475 x .22 = $10,004.50 + $4,664 (from previous bracket) = $14,668.50 in total taxes owed.

You can change how much you owe by taking advantage of tax deductions and tax credits.

Tax deductions reduce the amount of your taxable income, which, in turn, reduces the amount of taxes you owe. You can choose to either take the standard deduction available to all tax filers or itemize specific deductions. It makes sense to take the standard deduction if it is a higher amount than the deductions you’d get by itemizing.

For the 2021 tax year, the standard deduction is $12,550 for those taxpayers filing singly and for married taxpayers who are filing separately. It is $25,100 for joint filers and $18,800 for head-of-household filers.

This standard deduction reduces the amount of income on which you can be taxed. Say you are a single filer who made $80,000 of taxable income for the 2021 tax year. If you claim the standard deduction for single filers, you’d reduce your taxable income by $12,550. This would leave you with a taxable income of $67,450. You’d then be taxed only on that portion of your income.

If you decide not to take the standard deduction and instead itemize deductions – which you should only do if itemizing will result in a greater dollar amount of deductions – here are common deductions to consider.

• Home mortgage interest deduction
• Contributions to IRA and SEP retirement plans
• Charitable contributions
• State and local taxes (known as SALT, the deduction for your state and local income, sales and property taxes are now limited to $10,000 or $5,000 if married and filing separately, which largely only applies to taxpayers in states with high tax rates)
• Expenses associated with running your own business if you’re a business owner

You might also qualify for tax credits. These don’t reduce your taxable income or change your tax bracket. But they’re even better. They directly reduce your income tax liability. Whatever amount of tax you owe, you can deduct the entire amount of the tax credit on a dollar-for-dollar basis.

Say you owe $15,000 in taxes. If you receive a tax credit of $2,000, you’d subtract that amount directly from the taxes you owe. You’d now owe $13,000.

You may qualify for federal or state tax credits, and they vary by income, so be sure to talk with a tax professional. Common tax credits include:

• Child tax credit
• Earned income tax credit
• Adoption tax credit
• Residential energy tax credit
• Renter’s tax credit

Why Do Tax Brackets Change From Year To Year?

The IRS adjusts tax brackets each year to reflect changes in the cost of living. Typically, the U.S. economy sees at least some level of inflation each year. Because of this, the IRS usually adjusts tax brackets upward each year.

The Bottom Line: As Your Income Grows, You May Face A Higher Marginal Tax Rate

How much you pay in federal income taxes each year is based on your taxable income, tax bracket and the marginal tax rate attached to your bracket. You can exert some control over how much you pay in taxes each year by taking advantage of tax credits and deductions. And owning a home is one source of deductions, including mortgage interest and property taxes.

If you are interested in reducing your yearly tax bill, learn more about tax deductions for first-time homeowners.

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