Wolters Kluwer Tax & Accounting and Thomson Reuters Checkpoint have released their predictions for the expected annual inflation adjustments from the Internal Revenue Service for various tax-related items.
The information includes estimated ranges for the various 2021 tax brackets along with projections for different inflation-sensitive tax figures, such as the standard deduction. The projections are based on the relevant inflation data recently released by the US Department of Labor.
Since the late 1980s, the Tax Code has mandated that federal income tax brackets be adjusted for inflation annually. The inflation adjustments have been inserted into the Internal Revenue Code in recent years with increasing frequency. For instance, the Tax Code now requires more than 50 other inflation-driven computations to figure deduction, credit and exclusion amounts on top of the more than 30 separate computations needed to inflation-adjust the tax bracket schedules each year. Estimates for any of the inflation-adjusted tax figures for 2021 are also subject to any changes to the tax law that could be made by Congress over the course of the next year. That’s especially unpredictable during an election year.
Earlier this month, Thomson Reuters Checkpoint released its
2021 Tax Rate Schedule Highlights
The basis standard deduction for 2021 will be:
For married filing joint returns and surviving spouses:
| If taxable income is: | The tax is: |
| Not over $19,900 | 10% of taxable income |
| Over $19,900 but not over $81,050 | $1,990 plus 12% of the excess over $19,900 |
| Over $81,050 but not over $172,750 | $9,328 plus 22% of the excess over $81,050 |
| Over $172,750 but not over $329,850 | $29,502 plus 24% of the excess over $172,750 |
| Over $329,850 but not over $418,850 | $67,206 plus 32% of the excess over $329,850 |
| Over $418,850 but not over $628,300 | $95,686 plus 35% of the excess over $418,850 |
| Over $628,300 | $168,993.50 plus 37% of the excess over $628,300 |
For single individuals (other than heads of household and surviving spouses):
| If taxable income is: | The tax is: |
| Not over $9,950 | 10% of taxable income |
| Over $9,950 but not over $40,525 | $995 plus 12% of the excess over $9,950 |
| Over $40,525 but not over $86,375 | $4,664 plus 22% of the excess over $40,525 |
| Over $86,375 but not over $164,925 | $14,751 plus 24% of the excess over $86,375 |
| Over $164,925 but not over $209,425 | $33,603 plus 32% of the excess over $164,925 |
| Over $209,425 but not over $523,600 | $47,843 plus 35% of the excess over $209,425 |
| Over $523,600 | $157,804.25 plus 37% of the excess over $523,600 |
Standard Deductions
| Filing Status | Standard Deduction |
| Joint return or surviving spouse | $25,100 (up from $24,800 for 2020) |
| Single (other than HoH or surviving spouse) | $12,550 (up from $12,400 for 2020) |
| Head of household | $18,800 (up from $18,650 for 2020) |
| Married filing separate returns | $12,550 (up from $12,400 for 2020) |
