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2021 IRS Tax Rates & Inflation Adjustments



Marginal Rates: For tax year 2021 the marginal tax rates are as follows:

  • 37% for incomes greater than $523,600 ($628,300 for married couples filing jointly);

  • 35%, for incomes over $209,425 ($418,850 for married couples filing jointly);

  • 32% for incomes over $164,925 ($329,850 for married couples filing jointly);

  • 24% for incomes over $86,375 ($172,750 for married couples filing jointly);

  • 22% for incomes over $40,525 ($81,050 for married couples filing jointly);

  • 12% for incomes over $9,950 ($19,900 for married couples filing jointly).

  • 10% for incomes of $9,950 or less ($19,900 or less for married couples filing jointly).

Standard Deduction: For tax year 2021 the standard deduction is as follows:

  • Single or Married Filing Separate- $12,550 (up $150 from prior year)

  • Married Filing Jointly-$25,100 (up $300 from prior year)

  • Head of Household-$18,800 (up $150 from prior year)

Other Items to Note:

  • Annual Gift Exclusion-remained $15,000

  • Estates of Decedents- Decedents who die during 2021 have a basic exclusion amount of $11,700,000, up from a total of $11,580,000 for estates of decedents who died in 2020.

  • Child & Dependent Care Credit-For 2021, the American Rescue Plan Act of 2021, enacted March 11, 2021, made the credit substantially more generous (up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons) and potentially refundable.

  • Child Tax Credit- For 2021 only, the child tax credit amount is increased from $2,000 for each child age 16 or younger to $3,600 per child for kids who are 5 years old or younger and $3,000 per child for kids 6 to 17 years of age. This also increased the age limit from 16 to 17. Many families have been receiving advance payments of this credit starting in July of 2021.

  • Foreign Earned Income Exclusion- is $108,700 up from $107,600 for tax year 2020.


A full detailed list of all items can be found in the following IRS publication Revenue Procedure 2020-45- https://www.irs.gov/pub/irs-drop/rp-20-45.pdf

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