Your 2021 Tax Brackets vs. 2020 Tax Brackets

Government adjusts brackets for inflation

In the American tax system, income taxes are graduated, so you pay different rates on different amounts of taxable income, called tax brackets. The more you make, the more you pay. For example, a single taxpayer will pay 10 percent on taxable income up to $9,875 earned in 2020. The top tax rate is 37 percent for taxable income above $518,400 for tax year 2020. There are seven tax brackets in all.

The Internal Revenue Service increases those brackets from year to year to account for inflation and reduce “bracket creep,” when taxpayers get pushed into higher tax brackets not because they earned more money, but because of rising inflation. In tax year 2020, for example, a single person with taxable income up to $9,875 paid 10 percent, while in 2021, that income bracket rises to $9,950. Similarly, other brackets for income earned in 2021 have been adjusted upward as well.

The Internal Revenue Service increases those brackets from year to year to account for inflation and reduce “bracket creep,” when taxpayers get pushed into higher tax brackets not because they earned more money, but because of rising inflation. In tax year 2020, for example, a single person with taxable income up to $9,875 paid 10 percent, while in 2021, that income bracket rises to $9,950. Similarly, other brackets for income earned in 2021 have been adjusted upward as well.

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