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.