The IRS has released its updates for the tax year 2021.
As 2020 draws to a close, it’s hard to imagine even beginning to think about the tax year 2021, but the IRS has just released 2021 tax rates, standard deduction amounts, and more.
These updates are not for you to use in 2021 on your tax year 2020 filings, but rather the information you’ll be using in 2022 to complete your taxes for the tax year 2021.
Let’s break down some of the updates.
Tax Brackets, Rates, and Deductions
Forbes has some great infographics that clearly illustrate the tax rates and brackets both for individuals and for married individuals filing jointly.
For married individuals filing jointly:
- 10% – for taxable income up to $19,900
- 12% – for taxable income between $19,900 and $81,050
- 22% – for taxable income between $81,050 and $172,750
- 24% – for taxable income between $172,750 and $329,850
- 32% – for taxable income between $329,850 and $418,850
- 35% – for taxable income between $418,850 and $628,300
- 37% – for taxable income over $628,300
For individual taxpayers:
- 10% – for taxable income up to $9,950
- 12% – for taxable income between $9,950 and $40,525
- 22% – for taxable income between $40,525 and $86,375
- 24% – for taxable income between $86,375 and $164,925
- 32% – for taxable income between $164,925 to $209,425
- 35% – for taxable income between $209,425 to $523,600
- 37% – for taxable income over $523,600
Along with these brackets and rates, the IRS also announced an increase in the standard deduction of $300 for married couples filing jointly and $150 for individuals for tax year 2021 – bringing that total to $25,100 and $12,550, respectively. The standard deduction for heads of households will also increase by $150.
Exemptions
For the tax year 2021, the AMT (alternative minimum tax) exemption amounts have been adjusted for inflation. They are as follows:
- Individuals: $73,600
- Married filing jointly and surviving spouses: $114,600
- Married filing separately: $57,300
- Trusts and Estates: $25,700
Other Notable Changes
The drafts for forms 1099-NEC and 1099-MISC have also been released, with a few changes you may want to be aware of. You can do so by checking out our previous blog article.
Forbes’ article also breaks down the tax credits and tax deductions that the IRS has adjusted for tax year 2021.
To read the full IRS publication, click here.
For help with your 2020 and 2021 tax filing, you can sign up for a free eFile360 account.