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2021-2022 Tax Brackets and Federal Income Tax Rates

Published: (Updated: ) in Finance Advice by .

There are seven federal income tax brackets. Here’s what they are, how they work and how they affect you.

There are seven federal tax brackets for the 2020 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your bracket depends on your taxable income and filing status. These are the rates for taxes due in May 2021.

Tax brackets and rates for the 2021 tax year, as well as for 2019 and previous years, are elsewhere on this page.

Single filers 2020

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $9,875

10% of taxable income

12%

$9,876 to $40,125

$987.50 plus 12% of the amount over $9,875

22%

$40,126 to $85,525

$4,617.50 plus 22% of the amount over $40,125

24%

$85,526 to $163,300

$14,605.50 plus 24% of the amount over $85,525

32%

$163,301 to $207,350

$33,271.50 plus 32% of the amount over $163,300

35%

$207,351 to $518,400

$47,367.50 plus 35% of the amount over $207,350

37%

$518,401 or more

$156,235 plus 37% of the amount over $518,400

 

Married, filing jointly 2020

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $19,750

10% of taxable income

12%

$19,751 to $80,250

$1,975 plus 12% of the amount over $19,750

22%

$80,251 to $171,050

$9,235 plus 22% of the amount over $80,250

24%

$171,051 to $326,600

$29,211 plus 24% of the amount over $171,050

32%

$326,601 to $414,700

$66,543 plus 32% of the amount over $326,600

35%

$414,701 to $622,050

$94,735 plus 35% of the amount over $414,700

37%

$622,051 or more

$167,307.50 plus 37% of the amount over $622,050

Married, filing separately 2020

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $9,875

10% of taxable income

12%

$9,876 to $40,125

$987.50 plus 12% of the amount over $9,875

22%

$40,126 to $85,525

$4,617.50 plus 22% of the amount over $40,125

24%

$85,526 to $163,300

$14,605.50 plus 24% of the amount over $85,525

32%

$163,301 to $207,350

$33,271.50 plus 32% of the amount over $163,300

35%

$207,351 to $311,025

$47,367.50 plus 35% of the amount over $207,350

37%

$311,026 or more

$83,653.75 plus 37% of the amount over $311,025

Head of household 2020

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $14,100

10% of taxable income

12%

$14,101 to $53,700

$1,410 plus 12% of the amount over $14,100

22%

$53,701 to $85,500

$6,162 plus 22% of the amount over $53,700

24%

$85,501 to $163,300

$13,158 plus 24% of the amount over $85,500

32%

$163,301 to $207,350

$31,830 plus 32% of the amount over $163,300

35%

$207,351 to $518,400

$45,926 plus 35% of the amount over $207,350

37%

$518,401 or more

$154,793.50 plus 37% of the amount over $518,400

 

2021 federal income tax brackets

Single filers 2021

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $9,950

10% of taxable income

12%

$9,951 to $40,525

$995 plus 12% of the amount over $9,950

22%

$40,526 to $86,375

$4,664 plus 22% of the amount over $40,525

24%

$86,376 to $164,925

$14,751 plus 24% of the amount over $86,375

32%

$164,926 to $209,425

$33,603 plus 32% of the amount over $164,925

35%

$209,426 to $523,600

$47,843 plus 35% of the amount over $209,425

37%

$523,601 or more

$157,804.25 plus 37% of the amount over $523,600

Married, filing jointly 2021

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $19,900

10% of taxable income

12%

$19,901 to $81,050

$1,990 plus 12% of the amount over $19,900

22%

$81,051 to $172,750

$9,328 plus 22% of the amount over $81,050

24%

$172,751 to $329,850

$29,502 plus 24% of the amount over $172,750

32%

$329,851 to $418,850

$67,206 plus 32% of the amount over $329,850

35%

$418,851 to $628,300

$95,686 plus 35% of the amount over $418,850

37%

$628,301 or more

$168,993.50 plus 37% of the amount over $628,300

Married, filing separately 2021

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $9,950

10% of taxable income

12%

$9,951 to $40,525

$995 plus 12% of the amount over $9,950

22%

$40,526 to $86,375

$4,664 plus 22% of the amount over $40,525

24%

$86,376 to $164,925

$14,751 plus 24% of the amount over $86,375

32%

$164,926 to $209,425

$33,603 plus 32% of the amount over $164,925

35%

$209,426 to $314,150

$47,843 plus 35% of the amount over $209,425

37%

$314,151 or more

$84,496.75 plus 37% of the amount over $314,150

Head of household 2021

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $14,200

10% of taxable income

12%

$14,201 to $54,200

$1,420 plus 12% of the amount over $14,200

22%

$54,201 to $86,350

$6,220 plus 22% of the amount over $54,200

24%

$86,351 to $164,900

$13,293 plus 24% of the amount over $86,350

32%

$164,901 to $209,400

$32,145 plus 32% of the amount over $164,900

35%

$209,401 to $523,600

$46,385 plus 35% of the amount over $209,400

37%

$523,601 or more

$156,355 plus 37% of the amount over $523,600

How tax brackets work

The United States has a progressive tax system, meaning people with higher taxable incomes pay higher federal income tax rates.

  • Being “in” a tax bracket doesn’t mean you pay that federal income tax rate on everything you make. The progressive tax system means that people with higher taxable incomes are subject to higher federal income tax rates, and people with lower taxable incomes are subject to lower federal income tax rates.

  • The government decides how much tax you owe by dividing your taxable income into chunks — also known as tax brackets — and each chunk gets taxed at the corresponding tax rate. The beauty of this is that no matter which bracket you’re in, you won’t pay that tax rate on your entire income. (This is the idea behind the concept of effective tax rate.)

  • Example #1: Let’s say you’re a single filer with $32,000 in taxable income. That puts you in the 12% tax bracket in 2020. But do you pay 12% on all $32,000? No. Actually, you pay only 10% on the first $9,875; you pay 12% on the rest. (Look at the tax brackets above to see the breakout.)

  • Example #2: If you had $50,000 of taxable income, you’d pay 10% on that first $9,875 and 12% on the chunk of income between $9,876 and $40,125. And then you’d pay 22% on the rest, because some of your $50,000 of taxable income falls into the 22% tax bracket. The total bill would be about $6,800 — about 14% of your taxable income, even though you’re in the 22% bracket. That 14% is called your effective tax rate.

  • That’s the deal only for federal income taxes. Your state might have different brackets, a flat income tax or no income tax at all.

 

What is a marginal tax rate?

Your marginal tax rate is the tax rate you would pay on one more dollar of taxable income. This typically equates to your tax bracket.

For example, if you’re a single filer with $30,000 of taxable income, you would be in the 12% tax bracket. If your taxable income went up by $1, you would pay 12% on that extra dollar too.

If you had $41,000 of taxable income, however, much of it would still fall within the 12% bracket, but the last few hundred dollars would land in the 22% tax bracket. Your marginal tax rate would be 22%.

How to get into a lower tax bracket and pay a lower federal income tax rate

Two common ways of reducing your tax bill are credits and deductions.

  • Tax credits directly reduce the amount of tax you owe; they don’t affect what bracket you’re in.

  • Tax deductions, on the other hand, reduce how much of your income is subject to taxes. Generally, deductions lower your taxable income by the percentage of your highest federal income tax bracket. So if you fall into the 22% tax bracket, a $1,000 deduction could save you $220.

In other words: Take all the tax deductions you can claim — they can reduce your taxable income and could kick you to a lower bracket, which means you pay a lower tax rate.

 

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Finance Advice 2021