Tax Updates: How to be prepared for the Tax Bracket System
How to be prepared for the Tax Bracket System
In 2017 the Tax Cut & Jobs Act (TCJA) was signed into law, which locked in the tax rates through 2025. Due to inflation the tax brackets were expanded but the tax rates remained the same. In 2017 the TCJA reduced tax rates for many taxpayers, the highest rate is 37% which applies if your income exceeds $628,300.
2021 Federal Income Tax Rates
Single
|
Tax Rate |
Taxable Income Bracket |
Tax Owed |
|
10% |
$0 – $9,950 |
10% of taxable income |
|
12% |
$9,951 – $40,525 |
$995 + 12% of the amount over $9,950 |
|
22% |
$40,526 – $86,375 |
$4,664 + 22% of the amount over $40,525 |
|
24% |
$86,376 – $164,925 |
$14,751 + 24% of the amount over $86,375 |
|
32% |
$164,926 – $209,425 |
$33,603 + 32% of the amount over $164,925 |
|
35% |
$209,426 – $523,600 |
$47,843 + 35% of the amount over $209,425 |
|
37% |
$523,601 or more |
$157,804.25 + 37% of the amount over $523,600 |
Head of Household
|
Tax Rate |
Taxable Income Bracket |
Tax Owed |
|
10% |
$0 – $14,200 |
10% of taxable income |
|
12% |
$14,201 – $54,200 |
$1,420 + 12% of the amount over $14,200 |
|
22% |
$54,201 – $86,350 |
$6,220 + 22% of the amount over $54,200 |
|
24% |
$86,351 – $164,900 |
$13,293 + 24% of the amount over $86,350 |
|
32% |
$164,901 – $209,400 |
$32,145 + 32% of the amount over $164,900 |
|
35% |
$209,401 – $ 523,600 |
$46,385 + 35% of the amount over $209,400 |
|
37% |
$523,601 or more |
$156,355 + 37% of the amount over $523,600 |
Married Filing Jointly
|
Tax Rate |
Taxable Income Bracket |
Tax Owed |
|
10% |
$0 – $19,900 |
10% of taxable income |
|
12% |
$19,901 – $81,050 |
$1,990 + 12% of the amount over $19,900 |
|
22% |
$81,051 – $172,750 |
$9,328 + 22% of the amount over $81,050 |
|
24% |
$172,751 – $329,850 |
$29,502 + 24% of the amount over $172,750 |
|
32% |
$329,851 – $418,850 |
$67,206 + 32% of the amount over $329,850 |
|
35% |
$418,851 – $628,300 |
$95,686 + 35% of the amount over $418,850 |
|
37% |
$628,301 or more |
$168,993.50 + 37% of the amount over $628,300 |
Married Filing Separately
|
Tax Rate |
Taxable Income Bracket |
Tax Owed |
|
10% |
$0 – $9,950 |
10% of taxable income |
|
12% |
$9,951 – $40,525 |
$995 + 12% of the amount over $9,950 |
|
22% |
$40,526 – $86,375 |
$4,664 + 22% of the amount over $40,525 |
|
24% |
$86,376 – $164,925 |
$14,751 + 24% of the amount over $86,375 |
|
32% |
$164,926 – $209,425 |
$33,603 + 32% of the amount over $164,925 |
|
35% |
$209,426 – $314,150 |
$47,843 + 35% of the amount over $209,425 |
|
37% |
$314,151 or more |
$84,496 + |
Tax Bracket System
The higher your income the higher your income tax rate. For example, you need Tax services and you’re a single filer with $45,000 in taxable income. That puts you in the 22% tax bracket, you pay a flat $4,664 plus 22% on 4,475, your total tax liability is $5,648.50.
Do you have the right Tax Preparer on your team?
Now keep in mind, you don’t pay taxes on your gross income, is taxable income is calculated after your deductions and credits are applied. This is where securing the right tax services is beneficial. If you need an experienced tax professional to provide you tax preparation services book your tax consult now. We also, provide virtual tax services, to gain access to our app give us a call.
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