February 2, 2021

The IRS has recently announced their annual inflation adjustments for the tax year 2021 which will include tax rate schedules, tax tables and cost of living adjustments.

These new numbers that the IRS released are to assist taxpayers in preparation for their 2021 tax returns in 2022. Taxpayers can view the list by going directly to the IRS website.

Here are a few tax items for the 2021 tax year that are important for taxpayers to know:

  • For married couples filing jointly for the 2021 tax year, the standard deduction will rise to $25,100 which has increased to $300 compared to the prior year.
  •  Single and married individuals who file separately will see their standard deduction increased to $12,550 for 2021 which is a $150 boost compared to last year.
  • For head of households, the standard deduction will be $18,800 for the 2021 tax year which is an increase of $150 compared to last year.
  • Personal exemptions for the 2021 tax year will remain at 0; this was an elimination of the personal exemption which was a provision in the Tax Cuts and Jobs Act.
  • For the 2021 tax year, the top tax rate will remain at 37% for individual single taxpayers with incomes greater than $523,600 and $628,300 for married couples filing jointly. Other rates to consider are:
  • 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).
    • The lowest rate is 10% for single individuals with incomes of $9,950 or less ($19,900 for married couples filing jointly).

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.