A Complete Breakdown of the IRS 2021 Tax Tables

Published By: Chad Silver
Last Updated: January 16, 2024

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The tax process is always changing, making it essential to stay up-to-date on the latest regulatory shifts. Failing to do so could mean improperly claiming and filing your taxes when the time comes, after all, which might create an auditing and financial nightmare.

The Internal Revenue Service (IRS) recently announced its adjustments for the new tax year, and that contained changes to the 2021 tax tables. Understanding these changes and what they mean for you can make a huge difference in your stress levels when it’s time to submit your tax 2021 return — especially after a year as difficult to navigate as 2020.

This guide will walk you through everything you need to know about the 2021 tax tables, what they are, how to read them, and how to avoid common errors associated with them.

What Are IRS Tax Tables?

An IRS tax table is a chart that displays the amount of tax due based on an individual’s received income. The tax rate in the table is shown as a percentage, a distinct amount, or a combination of the two. These tax tables are often used by estates, companies, and individuals to determine their capital gains and standard income.

Generally, an IRS tax table will:

One important aspect to understand is that the United States has a progressive tax system. Meaning that as you move up on the pay scale, you will move up the tax scale.

Why and How Do IRS Tax Tables Change?

Taxpayers with higher income will have higher federal income tax rates, while those with lower income will have lower federal income tax rates. Either way, you can end up in one of seven federal income tax brackets, each with its own marginal tax rate.

You should never get too comfortable with the tax bracket you are in, however. The IRS regularly changes them to account for inflation as well as reduce “bracket creep,” which occurs when a taxpayer gets pushed into a higher tax bracket because of inflation — not because they earned more income.

This means your chance of getting bumped into a higher tax bracket grows every year, making closely following the IRS’s inflation adjustment announcements important. In addition to this, presidential elections and shifting political power often have a significant effect on IRS tax tables.

How to Read 2021 Tax Tables

The IRS publishes tax tables to help taxpayers calculate their income taxes, but these tables can be rather complicated for many. Here are a few steps to help you read the 2021 tax tables.

Step 1: Figure Out Your Filing Status

The IRS allows you to select the filing status for which you are eligible. This is vital because your standard deduction amount will depend on the filing status you choose.

Step 2: Calculate Your Taxable Income

Your taxable income is typically your gross income minus the standard deductions for your filing status or the total of your itemized deductions. You then need to reduce your income again by subtracting any additional deductions for your dependents and yourself to arrive at your taxable income.

Step 3: Discover Your Income Bracket

Once you find the appropriate tax table for the year you are filing, you need to find the income bracket that contains your taxable income.

Step 4: Figure Out Your Tax Filing Status

Find the tax filing status that applies to you in the top row of the table. Each filing status has a different column, so make sure to use the right one for yours.

Step 5: Calculate the Amount of Taxes you Owe

Finally, you will look at the row with your income and the column for your filing status to see where they intersect. This is the amount of taxes you will owe. It is critical to understand how to use these tables, as it will make it easier for taxpayers to calculate the taxes they owe. Tax tables can also help taxpayers budget for future tax bills.

Common Pitfalls When Reading 2021 Tax Tables

As a taxpayer, you need to understand not only how the tax table works but also some common mistakes people make when reading the tax table. This can help ensure error- and delay-free returns, which helps taxpayers make the most of their savings.

Some of the most common pitfalls taxpayers experience when reading IRS tax tables include the following:

1. Selecting the incorrect filing status

This can impact your tax bracket, the tax credits, the deductions you can claim, and, ultimately, the amount of taxes you pay. If you can file as head of household, for example, you can also file as single. Filing as head of household can save you a significant amount of income tax in many situations, however.

2. Selecting the wrong number

If you select the wrong number from the 2021 tax table or fail to look at the column that applies to you it can become problematic. Double or triple check that you’re reading the right one for your situation to avoid huge issues on your return.

3. Using gross income instead of taxable income.

Be sure to consult a tax professional if you have questions about determining your taxable income. If you are handling this process yourself, you need to be extremely careful when reading these tax tables. Many times these common errors can delay your processing and significantly hold up your refund. That is why it may be more beneficial to work with tax experts.

Getting the Help You Need with IRS 2021 Tax Tables

These IRS tax tables are often confusing and tedious, but working with qualified tax professionals means you do not have to tackle these complexities on your own.

The experts at Silver Tax Group can speak with you about any 2021 tax table questions you may have and provide you the information you need to know. Contact us today to get started.