If you have an income, you’re responsible for taxes. The government taxes everyone, but Uncle Sam taxes wealthier taxpayers at a higher rate. Your tax bracket depends on how much you earn, whether you’re filing jointly, and a few other factors. We’re going to cover everything you need to know about 2021 tax brackets and explain how new legislation could change the game. Stay tuned and dig into the IRS tax brackets for 2021 to learn more about how the government determines your tax rate.
>> Check out the updated 2023 IRS tax brackets here <<
Tax Brackets Explained
Most countries either have a flat tax rate (one rate that everyone pays), or a progressive tax rate (one that changes depending on the amount of income you earn in a given year). Income taxes in the United States are progressive, so the IRS has developed different tax brackets for various income levels.
As your income grows, your applicable tax rate also increases. The government taxes higher earners more because they’re considered to have more disposable income.
Individual Tax Brackets 2021
If you’re just learning about the tax code, it’s important to know that there are different tax brackets for people in different circumstances. When it comes to individual tax returns, you can file in a few different ways Two ways in which you can file your taxes are as a single filer, or as married filing jointly
Single Filer Tax Brackets
If you aren’t married, then chances are you will be filing your taxes as a single individual. Below we’ve put together a table that shows the single filer IRS tax brackets for 2021, and their corresponding tax rates.
| Single-Filer Income | Tax Rate |
|---|---|
| Up to $9,950 | 10% |
| $9,951 to $40,525 | $995 + 12% of the amount over $9,950 |
| $40,526 to $86,375 | $4,664 + 22% of the amount over $40,525 |
| $86,376 to $164,925 | $14,751 + 24% of the amount over $86,375 |
| $164,926 to $209,425 | $33,603 + 32% of the amount over $164,925 |
| $209,426 to $523,600 | $47,843 + 35% of the amount over $209,425 |
| $523,601 or more | $157,804.25 + 37% of the amount over $523,600 |
Married Filing Jointly Tax Brackets 2021
On the other hand, most people who are married file their taxes as married filing jointly. We’ve compiled the IRS 2021 tax brackets for married couples filing jointly. You can find the tax brackets and their corresponding tax rates in the table below:
| Combined Income | Tax Rate |
|---|---|
| Up to $19,900 | 10% |
| $19,901 to $81,050 | $1,990 + 12% of the amount over $19,900 |
| $81,051 to $172,750 | $9,328 + 22% of the amount over $81,050 |
| $172,751 to $329,850 | $29,502 + 24% of the amount over $172,750 |
| $329,851 to $418,850 | $67,206 + 32% of the amount over $329,850 |
| $418,851 to $628,300 | $95,686 + 35% of the amount over $418,850 |
| $628,301 or more | $168,993.50 + 37% of the amount over $628,300 |
Corporate Tax Brackets for 2021
Tax season becomes a bit more complicated for those who run a business structured as a corporation. Since a corporation is treated as a completely different person from its owners, it’s taxed separately from the owners.
C-Corp Tax Rates 2021
A C-Corp is taxed at a flat rate of 21% at the federal level, plus applicable state taxes. However, new legislation in the American Jobs Plan seeks to increase federal income taxes for corporations to 28%
S-Corp Tax Rates 2021
S-Corps are a bit different than C-Corps in terms of how they function and how they are taxed. S-Corps are pass-through entities, so their profits flow through the entity and goes directly to shareholders. As a result, S-Corps don’t pay corporate taxes on their earnings. The income passes through to the individual shareholders’ tax returns and is taxed at the applicable tax rate.
Estates and Trusts Tax Brackets for 2021
Estates and trusts are a whole different ball game in the world of taxes. An estate is essentially all of the assets that are left behind after a person passes on. Although times like this are incredibly sad, you will likely be on the hook for taxes if someone leaves you behind a sizable estate.
Trusts are often associated with estates, as they are often used to distribute the contents of sizable estates over time to their beneficiaries. This is done to ensure long-lasting prosperity for the trust beneficiary.
Income Tax Brackets for Estates and Trusts 2021
Much like corporations, there are different tax repercussions for distributions from trusts and estates. However, most people won’t pay an estate or inheritance tax because the IRS exempts estates smaller than $11.7 million dollars from federal estate taxes.
However, if you inherit an estate larger than $11.7 million or you’re a trust beneficiary, you could be on the hook for federal taxes.
We’ve put together this handy chart to give you a better idea of how much you will have to pay in taxes:
| Taxable Income | Tax Rate |
|---|---|
| $2,650 and below | 10% of taxable income |
| Over $2,650 but not over $9,550 | $265 plus 24% of the excess over $2,650 |
| Over $9,550 but not over $13,050 | $1,921 plus 35% of the excess over $9,550 |
| Over $13,050 | $3,146 plus 37% of the excess over $13,050 |
Start Tax Planning for 2021 Now
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