If you want to keep as much money as possible, you’ll need to know your 2021 tax bracket and federal tax rate. The first step in enduring tax season is determining your tax bracket and filing category.
Then, do everything you can to reduce your taxable income — without, of course, concealing income. If you are uncertain about anything, consult a professional and use a tax calculator.
What are tax brackets?
The IRS established tax brackets to determine how much you must pay annually, determined by your salary. If your taxable income increases, so will your tax burden.
In other words, the government uses a bracket system to figure out how much tax you should pay on your income. This system is based on your filing status and your income.
But determining your tax obligation is not as simple as comparing your salary to the previously mentioned tax brackets.
Figuring out your tax bracket
One of the most important things to understand is your tax bracket when you file your taxes. This is the percentage of your income taxed at each level. The higher your income, the higher your tax bracket will be.
Income and filing status determines the federal income tax brackets. However, it is essential to realize that your entire income is not taxed at your tax bracket rate. Because the IRS uses a graduated tax system, taxpayers pay a higher rate as their income increases.
To illustrate how tax brackets work, consider a married couple filing jointly with an annual taxable income of $700,000. This status places them in the top tax bracket, which is taxed at a rate of 37%. However, this tax rate only applies to incomes over $628,300, and this amount is added to $168,994 — the total graduated taxes paid on incomes up to $628,300. The above couple would owe 37% of $71,700, or $26,529. When added to $168,994, this couple’s total tax liability would be $195,323.
Various tax filing categories
Those who do not file as a trust or estate fall into the following tax filing categories. The category you fall under will determine which 2021 tax forms you must complete and which tax bracket applies to your situation.
- Individual taxpayers — also known as single filing status for Form 1040
- Heads of household
- Qualifying widow or widower
- Married individuals filing jointly
- Married individuals filing separately
Since the tax brackets for married filing jointly and qualifying widow/widower is equivalent, some combine the five filing statuses into four.
Your 2022 tax rate will be lower if you qualify as a head of household. In addition, your 2022 standard deduction will be greater than if you filed as a single or married filing separately.
You may be eligible to file as head of household if you fulfill all of the following conditions:
- On December 31, you are unmarried or considered unmarried.
- You paid more than fifty percent of the annual cost of maintaining a home.
- You lived with a qualifying person for more than half of the year.
If the qualifying person you’re claiming is a dependent parent, however, that person does not need to live with you to file as head of household.
2021 income tax brackets
(Due April 2022 or October 2022 if you have an extension)
Following are the main seven federal tax brackets for the 2021 tax year: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Your tax bracket will be determined by your filing status and taxable income (such as your wages).
2021 Single filers tax brackets
| Taxable income: | Tax due: |
| Not over $9,950 | 10% of the taxable income |
| Over $9,950 but not over $40,525 | $995 + 12% of the excess over $9,950 |
| Over $40,525 but not over $86,375 | $4,664 + 22% of the excess over $40,525 |
| Over $86,375 but not over $164,925 | $14,751 + 24% of the excess over $86,375 |
| Over $164,925 but not over $209,425 | $33,603 + 32% of the excess over $164,925 |
| Over $209,425 but not over $523,600 | $47,843 + 35% of the excess over $209,425 |
| Over $523,600 | $157,804.25 + 37% of the excess over $523,600 |
2021 Married filing separately tax brackets
| Taxable income: | Tax due: |
| Not over $9,950 | 10% of the taxable income |
| Over $9,950 but not over $40,525 | $995 + 12% of the excess over $9,950 |
| Over $40,525 but not over $86,375 | $4,664 + 22% of the excess over $40,525 |
| Over $86,375 but not over $164,925 | $14,751 + 24% of the excess over $86,375 |
| Over $164,925 but not over $209,425 | $33,603 + 32% of the excess over $164,925 |
| Over $209,425 but not over $314,150 | $47,843 + 35% of the excess over $209,425 |
| Over $314,150 | $84,496 + 37% of the excess over $314,150 |
2021 Head of household tax brackets
| Taxable income: | Tax due: |
| Not over $14,200 | 10% of the taxable income |
| Over $14,200 but not over $54,200 | $1,420 + 12% of the excess over $14,200 |
| Over $54,200 but not over $86,350 | $6,220 + 22% of the excess over $54,200 |
| Over $86,350 but not over $164,900 | $13,293 + 24% of the excess over $86,350 |
| Over $164,900 but not over $209,400 | $32,145 + 32% of the excess over $164,900 |
| Over $209,400 but not over $523,600 | $46,385 + 35% of the excess over $209,400 |
| Over $523,600 | $156,355 + 37% of the excess over $523,600 |
2021 Married filing jointly tax brackets
| Taxable income: | Tax due: |
| Not over $19,900 | 10% of the taxable income |
| Over $19,900 but not over $81,050 | $1,990 + 12% of the excess over $19,900 |
| Over $81,050 but not over $172,750 | $9,328 + 22% of the excess over $81,050 |
| Over $172,750 but not over $329,850 | $29,502 + 24% of the excess over $172,750 |
| Over $329,850 but not over $418,850 | $67,206 + 32% of the excess over $329,850 |
| Over $418,850 but not over $628,300 | $95,686 + 35% of the excess over $418,850 |
| Over $628,300 | $168,993.50 + 37% of the excess over $628,300 |
2022 income tax brackets
(Due April 2023 or October 2023 if you have an extension)
Following are the main seven federal tax brackets for the 2022 tax year: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Your tax bracket will be determined by your filing status and taxable income (such as your wages).
2022 Single filers tax brackets
| Taxable income: | Tax due: |
| Not over $10,275 | 10% of the taxable income |
| Over $10,275 but not over $41,775 | $1,027.50 + 12% of the excess over $10,275 |
| Over $41,775 but not over $89,075 | $4,807.50 + 22% of the excess over $41,775 |
| Over $89,075 but not over $170,050 | $15,213.50 + 24% of the excess over $89,075 |
| Over $170,050 but not over $215,950 | $34,647.50 + 32% of the excess over $170,050 |
| Over $215,950 but not over $539,900 | $49,335.50 + 35% of the excess over $215,950 |
| Over $539,900 | $162,718 + 37% of the excess over $539,900 |
2022 Married filing separately tax brackets
| Taxable income: | Tax due: |
| Not over $10,275 | 10% of the taxable income |
| Over $10,275 but not over $41,775 | $1,027.50 + 12% of the excess over $10,275 |
| Over $41,775 but not over $89,075 | $4,807.50 + 22% of the excess over $41,775 |
| Over $89,075 but not over $170,050 | $15,213.50 + 24% of the excess over $89,075 |
| Over $170,050 but not over $215,950 | $34,647.50 + 32% of the excess over $170,050 |
| Over $215,950 but not over $539,900 | $49,335.50 + 35% of the excess over $215,950 |
| Over $323,925 | $86,127 + 37% of the excess over $323,925 |
2022 Head of household tax brackets
| Taxable income: | Tax due: |
| Not over $14,650 | 10% of the taxable income |
| Over $14,650 but not over $55,900 | $1,465 + 12% of the excess over $14,650 |
| Over $55,900 but not over $89,050 | $6,415 + 22% of the excess over $55,900 |
| Over $89,050 but not over $170,050 | $13,708 + 24% of the excess over $89,050 |
| Over $170,050 but not over $215,950 | $33,148.50 + 32% of the excess over $170,050 |
| Over $215,950 but not over $539,900 | $47,836.50 + 35% of the excess over $215,950 |
| Over $539,900 | $162,218.50 + 37% of the excess over $539,900 |
2022 Married filing jointly tax brackets
| Taxable income: | Tax due: |
| Not over $20,550 | 10% of the taxable income |
| Over $20,550 but not over $83,550 | $2,055 + 12% of the excess over $20,550 |
| Over $83,550 but not over $178,150 | $9,615 + 22% of the excess over $83,550 |
| Over $178,150 but not over $340,100 | $30,247 + 24% of the excess over $178,150 |
| Over $340,100 but not over $431,900 | $69,295 + 32% of the excess over $340,100 |
| Over $431,900 but not over $647,850 | $98,671 + 35% of the excess over $431,900 |
| Over $647,850 | $174,253.50 + 37% of the excess over $647,850 |
Getting into a lower tax bracket
There are many ways to get into a lower tax bracket, and each person’s situation is unique. There are three main strategies for reducing your taxable income: taking advantage of deductions, credits, and exemptions, using tax shelters, and managing your investments.
Deductions reduce the amount of income that is subject to taxation. They come in two varieties: standard deductions and itemized deductions. The standard deduction is a set amount that all taxpayers can take regardless of how many deductions they claim on their return. Itemized deductions are specific expenses that can be deducted from your taxable income if they exceed the standard deduction for your filing status.
Credits are dollar-for-dollar reductions in your income tax bill. They come in various forms, such as the child care credit or the education credit, and can be very cost-effective.
Exemptions are amounts you can subtract from your total income to arrive at your taxable income. For example, you can deduct $4,050 per qualifying dependent from your total income to get to your taxable income figure.
In addition to these strategies, there are other ways to manage your taxes that may be more applicable depending on individual circumstances. For example, you may want to consider using tax shelters or investing in certain types of assets.
The key is to understand the options available to you and make the most of them.
