Tax Season 2021: What You Need to Know
If you’re like us, you probably never want to think about 2020 again. But there is one lingering ghost from last year that you need to get rid of before you can truly move on for good—and that’s your 2020 taxes.
Thanks to the coronavirus (among other things), a lot has changed for the 2021 tax season. That’s why you need to start thinking about your tax situation now while you still have time on your side. We want you to be prepared to tackle your taxes before they tackle you. And to do that, we’re going to dig into what’s new for this tax season and what’s staying the same.
First, here are the main things you need to know right off the bat for the 2021 tax season:
Tax Day is Thursday, April 15, 2021. You must file your 2020 tax returns by this date!
The standard deduction for 2020 increased to $12,400 for single filers and $24,800 for married couples filing jointly.
Income tax brackets increased in 2020 to account for inflation.
But that’s just scratching the surface! Let’s break down the details so you can file your taxes with confidence this year.
Income Brackets and Rates for 2021 Tax Season
Here’s a refresher on how income brackets and tax rates work: Your tax rate (the percentages of your income that you pay in taxes) is based on what tax bracket (income range) you’re in.
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For example, if you’re single and your income is $75,000, then you’re in the 22% tax bracket. But that doesn’t mean your tax rate is a flat 22%. Instead, part of your income is taxed at 10%, another part at 12%, and the last part at 22%. (You can check out the chart below to see all the tax brackets with their corresponding tax rate.)
For the 2020 tax year, the tax rates are the same—but there are some slight changes to the brackets. Basically, the brackets have been adjusted by a few hundred dollars from 2019 to account for inflation.