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What Tax Bracket Am I In?

August 31, 2021 · 5 minute read

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What Tax Bracket Am I In?

There are seven federal tax brackets for 2021, ranging from 10% to 37%. Generally, the more you earn, the higher your tax rate, and the more money you will owe the IRS in taxes.

How much you’ll pay in federal tax on your 2021 income (due in 2022) will depend on which bracket your income falls in, as well as your tax-filing status–which is whether you’re single, married filing jointly, married filing separately, or a head of household.

When people look at tax charts, however, they often assume that having an income in a particular tax bracket (such as 12% or 22%) means that all of your income is taxed at that rate.

Actually, tax brackets are “marginal,” which means only the part of your income within each range (or “bracket”) is taxed at the corresponding tax rate.

Read on to learn which tax bracket you are in, how to use the 2021 tax chart to figure out how much you will owe, plus tips for how to lower your tax bracket.

2021 Tax Brackets

Below are the tax rates for the 2022 filing season. Dollar amounts represent taxable income earned in 2021. Your taxable income is what you get when you take all of the money you’ve earned and subtract all of the tax deductions you’re eligible for.

Not sure of your filing status? This interactive IRS quiz can help you determine the correct status. If you qualify for more than one, it tells you which one will result in the lowest tax bill.

For Unmarried People

Tax rate of:

•  10% for people earning $0 to $9,950

•  12% for people earning $9,951 to $40,525

•  22% for people earning $40,526 to $86,375

•  24% for people earning $86,376 to $164,925

•  32% for people earning $164,926 to $209,425

•  35% for people earning $209,426 to $523,600

•  37% for people earning $523,601 or more

For Married People Who Are Filing Jointly

Tax rate of:

•  10% for people earning $0 to $19,900

•  12% for people earning $19,901 to $81,050

•  22% for people earning $81,051 to $172,750

•  24% for people earning $172,751 to $329,850

•  32% for people earning $329,851 to $418,850

•  35% for people earning $418,851 to $628,300

•  37% for people earning $628,301 or more

For Married People Who Are Filing Separately

Tax rate of:

•  10% for people earning $0 to $9,950

•  12% for people earning $9,951 to $40,525

•  22% for people earning $40,526 to $86,375

•  24% for people earning $86,376 to $164,925

•  32% for people earning $164,926 to $209,425

•  35% for people earning $209,426 to $314,150

•  37% for people earning $314,151 or more

For Heads of Household

Tax rate of:

•  10% for people earning $0 to $14,200

•  12% for people earning $14,201 to $54,200

•  22% for people earning $54,201 to $86,350

•  24% for people earning $86,351 to $164,900

•  32% for people earning $164,901 to $209,400

•  35% for people earning $209,401 to $523,600

•  37% for people earning $523,601 or more

Recommended: How Income Tax Withholding Works

How Do Tax Brackets Work?

The federal government uses a progressive tax system, which means that filers with higher incomes pay higher tax rates.

The tax system is also graduated in such a way so that taxpayers don’t pay the same rate on every dollar earned, but instead pay higher rates on each dollar that exceeds a certain threshold.

For example, if your taxable income is $50,000 for 2021, not all of it is taxed at 22%. Some of your income will be taxed at the lower tax brackets, 10% and 12%.

According to the 2021 tax brackets (the ones you’ll use when you file in 2022), an unmarried person earning $50,000 would pay:

10% on the first $9,950, or $995

12% on the next $30,575 ($40,525 – $9,950 = $30,575), or $3,669

22% on the next $9,475 ($50,000 – $40,525 = $9,475), or $2,084.50

Total federal tax due would be $995 + $3,669 + $2,084.50, or $6,748.50

This doesn’t take into account any deductions. Many Americans take the standard deduction (rather than itemize their deductions).

For income earned in 2021, the standard deduction is $12,550 for unmarried people and for those who are married, filing separately; $25,100 for those married, filing jointly; $18,800 for heads of household.

In addition to federal taxes, filers may also need to pay state income tax. The rate you will pay for state tax will depend on the state you live in. Some states also have brackets, and a progressive rate. You may also need to pay local/city taxes.

How to Lower Your 2021 Tax Bracket

You may be able to lower your income into another bracket (especially if your taxable income falls right on the cut-off points between two brackets) by taking tax deductions.

Tax deductions lower how much of your income is subject to taxes. Generally, deductions lower your taxable income by the percentage of your highest federal income tax bracket. So if you fall into the 22% tax bracket, a $1,000 deduction would save you $220.

Tax credits, such as the earned income tax credit, or child tax credit, can also reduce how you pay Uncle Sam–but not by putting you in a lower tax bracket.

Tax credits reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability. A tax credit valued at $1,000, for instance, lowers your total tax bill by $1,000.

Many people choose to take the standard deduction, but a tax expert can help you figure out if you’d be better off itemizing deductions, such as your mortgage interest, medical expenses, and state and local taxes.

Whether you take the standard deduction or itemize, here are some additional ways you may be able to lower your tax bracket:

•  Making year-end charitable contributions. For 2021, the IRS will allow people to deduct up to $300 in cash donations to qualifying charities, even if they don’t itemize their deductions (i.e., take the standard deduction).

•  Delaying income. For example, if you freelance, you might consider waiting to bill for services performed near the end of the 2021 until January 2022.

•  Making contributions to certain tax-advantaged accounts, such as health savings accounts and retirement funds, keeping in mind that there are annual contribution limits.

•  Deducting some of your student loan interest. Depending on your income, you may be able to deduct up to $2,500 in student loan interest paid in 2021.
It can be a good idea to work with a CPA (certified public accountant) or tax advisor to see if you qualify for these and other ways to lower your tax bracket.

Recommended: What Happens If I Miss the Tax Filing Deadline?

The Takeaway

The government decides how much tax you owe by dividing your taxable income into chunks–also known as tax brackets– and each chunk gets taxed at the corresponding tax rate.

There are seven federal tax brackets for the 2021 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

The benefit of a progressive tax system is that no matter which bracket you’re in, you won’t pay that tax rate on your entire income.

Depending on your financial situation, you can use both tax deductions and credits to lower the amount you pay Uncle Sam each year.

Knowing your tax bracket can help you get an idea of how much you will owe on your 2021 income.

If you think you might get hit with a sizable tax bill in 2022, you may want to look into changing your paycheck withholdings or, if you’re a freelancer, making quarterly estimated tax payments.

You may also want to start putting some “tax money” aside each month, so you won’t have to scramble to pay any taxes owed when you file in April.

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