12/10/2023 0 Comments Business federal tax brackets 2021Here’s a look at two of them in preparation for #TaxDay. Not only can an extra dollar push you into the next highest tax bracket, but it can also affect your exposure to certain surtaxes. So, for example instead of 10% being applied to the first $9,950 of income, it will now be applied to the first $10,275 for a taxpayer filing individually. The annual adjustment is designed to avoid “bracket creep”, when people are pushed into a higher income bracket or inflation reduces the value of other deductions or credits. This is based on the Chained Consumer Price Index created by the Bureau of Labor Statistics through continuously tracking the changing price of a basket of goods and consumer purchasing behavior in response to that change. However, the income thresholds for tax brackets are adjusted to reflect inflation or the cost of living. The seven brackets remain the same 10%, 12%, 22%, 24%, 32%, 35% and 37% which were set after the 2017 Tax Cuts and Jobs Act.
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