What Is My Tax Bracket for the 2021 Tax Year?
It's never too early to start looking at your tax obligations for the coming tax season. With COVID-19 impacting many Americans through 2021, it's possible your income and deductions may have changed. The information in this article is for the 2021 tax year, which most taxpayers will file in 2022.
The seven 2020 tax rates themselves didn't change (they are the same as those in effect for the 2020 tax year), however, the tax bracket ranges were modified based on inflation. Because of this, it's possible you could be in a different tax bracket for 2021 than the last time you reported your taxes, even if your income has not changed.1
Reminder: Tax Brackets Are Marginal
The IRS divides income into different tax rates. Each subsequent portion of your income will have an increased tax rate. For example, if you are a single filer who made $40,125 in 2020, your first $9,950 will be taxed at 10 percent. The next portion of your income will be taxed at an increased rate; from $9,951 to $40,525, your tax rate will be 12 percent.
As your income increases, you’ll fall into higher tax brackets and will have a higher tax rate for each portion of your income.
Why Would My Tax Bracket Be Different?
The IRS regularly adjusts tax brackets to take inflation into consideration. This is because, with inflation, people will face higher prices, meaning the purchasing power of their dollar is decreased. Knowing this, the IRS adjusts brackets in order to avoid bracket creep, a circumstance that occurs when inflation pushes your income into a higher tax bracket, or credits and deductions are reduced. In this scenario, an individual may not actually have increased purchasing power or greater disposable income, even with an increase in wages and salaries.2
2021 Tax Brackets
Without further ado, here are the 2021 tax brackets according to your filing status and income from the IRS.1
10% Tax Rate
- Single Individuals: from $0 to $9,950
- Married Individuals Filing Jointly: from $0 to $19,900
- Heads of Households: from $0 to $14,200
- Married Individuals Filing Separately: from $0 to $9,950
12% Tax Rate
- Single Individuals: from $9,951 to $40,525
- Married Individuals Filing Jointly: from $19,901 to $81,050
- Heads of Households: from $14,201 to $54,200
- Married Individuals Filing Separately: from $9,951 to $40,525
22% Tax Rate
- Single Individuals: from $40,526 to $86,375
- Married Individuals Filing Jointly: from $81,051 to $172,750
- Heads of Households: from $54,201 to $86,350
- Married Individuals Filing Separately: from $40,526 to $86,375
24% Tax Rate
- Single Individuals: from $86,376 to $164,925
- Married Individuals Filing Jointly: from $172,751 to $329,850
- Heads of Households: from $86,351 to $164,900
- Married Individuals Filing Separately: from $86,376 to $164,925
32% Tax Rate
- Single Individuals: from $164,926 to $209,425
- Married Individuals Filing Jointly: from $329,851 to $418,850
- Heads of Households: from $164,901 to $209,400
- Married Individuals Filing Separately: from $164,926 to $209,425
35% Tax Rate
- Single Individuals: $209,426 to $523,600
- Married Individuals Filing Jointly: from $418,851 to $628,300
- Heads of Households: from $209,401 to $523,600
- Married Individuals Filing Separately: from $209,426 to $314,150
37% Tax Rate
- Single Individuals: over $523,600
- Married Individuals Filing Jointly: over $628,300
- Heads of Households: over $523,600
- Married Individuals Filing Separately: over $314,150
In addition to the tax inflation adjustments, the IRS also altered standard deductions. While the above rates and brackets are at the federal level, different states might have varying brackets and rates.
Spiritual Application
Taxes and Spirituality - what in the world could those have to do with each other? The answer is surprisingly simple. Whether you agree with the idea of taxes or not, we are instructed to obey the laws of the land as it relates to paying taxes. Romans 13:7(NLT) states, "Pay your taxes and government fees to those who collect them, and give respect and honor to those who are in authority." The wording in this passage is important. It says we are to pay respect and honor to the office that is held by those in authority. Part of paying respect and honor is acting in obedience. What it is not saying is that we always have to like or agree with the policy that is in force. In fact, we should be holding those in authority accountable for their actions. And making our voices heard if we don't like something is an important of enacting positive change.
The most important spiritual part of paying taxes is not the dollar amount of taxes that we pay, but that we are acting in respect and honor towards our leaders. Have you ever disagreed with something a boss or parent has asked you to do, but you did it anyway? This is an act of respect and honor to our leaders and is pleasing to them. Furthermore, God is pleased when we obey the laws of our land, even if we don't always like or agree with them. This allows us to be in a position to receive His blessing in our lives, even if it feels contradictory to our mind. And having a flow of God's blessings in our lives will yield a far better return than any investment on this earth could ever generate.
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