Last Updated on October 28, 2020
The Internal Revenue Service has unveiled the updated tax brackets. These brackets reflect adjustments for inflation and will be applied to the 2021 tax filing year. But a win by Democrat presidential candidate Joe Biden in November will change these brackets.
American taxpayers have been categorized into one of seven brackets depending on income: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. These rates will go into effect for 2021 and will be employed to prepare your tax returns in 2022.
So, what does that mean income-wise for those filing individually:
- 37 percent for incomes over $523,600
- 35 percent for incomes over $209,425
- 32 percent for incomes over $164,925
- 24 percent for incomes over $86,375
- 22 percent for incomes over $40,525
- 12 percent for incomes over $9,950
- 10 percent for incomes of $9,950 or less
For those who are married or filing jointly it breaks down this way:
- 37 percent for incomes over $628,300
- 35 percent for incomes over $418,850
- 32 percent for incomes over $329,850
- 24 percent for incomes over $172,750
- 22 percent for incomes over $81,050
- 12 percent for incomes over $19,900
- 10 percent for incomes of $19,900 or less
The IRS has, in addition, adjusted the “standard deduction,” which is the deduction used to create a baseline for what is taxable in your income. For those filing as individuals the deduction rose to $12,550. For married couples or those filing jointly, the deduction jumped to $25,100.
There will also be an increase in the deduction heads of households can take. That deduction will be $18,800.
Democrat Joe Biden has said, both in the debates and on the campaign trail that he will rescind the Trump tax cuts.
Biden / Harris want to eliminate the Trump tax cuts, which means: a smaller capital stock, lower labor productivity, lower wages, and lower total output for businesses, reduced ownership of capital assets & reduced savings for individuals @GroverNorquisthttps://t.co/5WCDIBhsIv
— Newt Gingrich (@newtgingrich) October 20, 2020
Under the Trump tax cuts, the average family of four making $73,000 a year saw a 60 percent reduction in federal taxes, approximately $2,058. The conservative Heritage Foundation calculated that the typical American family will be about $45,000 better off over the course of the next 10 years because of higher take-home pay and a more robust and sovereign economy.