Current Tax Rates Information

(Provided by Tax Foundation)

2021 Tax Brackets

Income Tax Brackets and Rates

In 2021, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Table 1):

The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $523,600 and higher for single filers and $628,300 and higher for married couples filing jointly.

As you review the brackets, the income ranges for each rate have been adjusted for inflation.

Table 1. 2021 Tax Brackets and Rates for Single Filers, Married Couples Filing Jointly, and Heads of Households (Source: IRS)

Table 2. 2021 Standard Deduction and Personal Exemption (Source: IRS)

Table 3. 2021 Alternative Minimum Tax Exemption Phaseout Thresholds (Source: IRS) 

Table 4. 2021 Earned Income Tax Credit Parameters

Table 5. 2021 Qualified Business Income Deduction Thresholds (Source:IRS)

The tax year 2021 adjustments described below generally apply to tax returns filed in 2022.

The tax items for tax year 2021 of greatest interest to most taxpayers include the following dollar amounts:

The standard deduction for married couples filing jointly for tax year 2021 rises to $25,100, up $300 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,550 for 2021, up $150, and for heads of households, the standard deduction will be $18,800 for tax year 2021, up $150.

The personal exemption for tax year 2021 remains at 0, as it was for 2020; this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.

2020 Tax Brackets

Income Tax Brackets and Rates

For 2020, income limits for all tax brackets as well as all filers will be adjusted for inflation and will be as follows:

The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $518,400 and higher for single filers and $622,050 and higher for married couples filing jointly. (See Table 1)

As you review the brackets, the income ranges for each rate have been adjusted for inflation.

 

Table 1. Tax Brackets and Rates, 2020 (Source: IRS)

Standard Deduction and Personal Exemption

Standard deductions for single filers have increased by $200; $400 for married couples filing jointly (SEE Table 2). The personal exemption for 2020 remains eliminated.

 

Table 2. 2020 Standard Deduction and Personal Exemption (Source: IRS)

Alternative Minimum Tax

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two. More information can be found at IRS.Gov (SEE Table 3).

Table 3. 2020 Alternative Minimum Tax Exemptions (Source:IRS)

In 2020, the 28 percent AMT rate applies to excess AMTI of $197,900 for all taxpayers ($98,950 for married couples filing separate returns).

AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2020, the exemption will start phasing out at $518,400 in AMTI for single filers and $1,036,800 for married taxpayers filing jointly (SEE Table 4).

Table 4. 2020 Alternative Minimum Tax Exemption Phaseout Thresholds

Earned Income Tax Credit

Maximum Earned Income Tax Credit in 2020 for single and joint filers is $538, if the filer has no children (SEE Table 5). The maximum credit is $3,584 for one child, $5,828 for two children, and $6,660 for three or more children. These are small increases compared to 2019.

Table 5. 2020 Earned Income Tax Credit Parameters

Qualified Business Income Deduction

The Tax Cuts and Jobs Act includes a 20 percent deduction for pass-through businesses against up to $163,300 of qualified business income for single taxpayers and $326,600 for married taxpayers filing jointly (SEE Table 6).

Table 6. 2020 Qualified Business Income Deduction Thresholds (Source:IRS)