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Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption: 1988 to 2021

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Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption: 1988 to 2021 Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption: 1988 to 2021 Updated February 16, 2021 Congressional Research Service https://crsreports.congress.gov RL34498 SUMMARY RL34498 Federal Individual Income Tax Brackets, February 16, 2021 Standard Deduction, and Personal Exemption: Gary Guenther Analyst in Public Finance 1988 to 2021 This report tracks changes in federal individual income tax brackets, the standard deduction, and the personal exemption since 1988. All three have been indexed for inflation since 1981. The report also explains how certain tax provisions are adjusted for inflation. The table below shows the levels in 2020 for all income tax brackets, the personal exemption, and the standard deduction. Current statutory tax rates have evolved from the Tax Reform Act of 1986 (TRA86; P.L. 99-514) and several tax laws enacted since then. Of particular importance are the Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L. 101-508), the Omnibus Budget Reconciliation Act of 1993 (OBRA93; P.L. 103-66), the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16), the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUC; P.L. 111-312), the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240), and the tax rate changes in the 2017 tax revision (P.L. 115-97). As shown in the table, there are seven statutory marginal individual income tax rates from 2018 to 2025: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Starting in 2026, these rates are scheduled to revert to their 2017 levels. Each rate applies to a different range of income, and the combination is known as a tax bracket. A taxpayer’s tax liability is the sum total of the tax that results from the portion of her or his taxable income that falls in each applicable tax bracket. This means that someone’s average tax rate (i.e., total tax owed divided by total income) is less than her or his marginal tax rate (i.e., the tax on an additional dollar of income), with the exception of taxpayers subject to the lowest marginal tax of 10%. For example, assume an income tax with no deductions, exemptions, exclusions, and credits. If Mary has a taxable income of $20,000 and half of that amount is taxed at 10% and half at 15%, then her tax liability is equal to ($10,000 x 0.10) + ($10,000 x 0.15), or $2,500. Mary’s average tax rate is 12.5%, while her marginal rate is 15%. More than 50 tax elements are indexed for inflation. These include the tax brackets, personal exemption, and standard deduction addressed in this report. Indexation helps prevent bracket creep, which happens when someone’s tax liability increases because of rises in his or her nominal income while real income remains unchanged. Until 2018, indexation of these items was based on the Consumer Price Index for All Urban Consumers (CPI-U). Congress permanently changed the inflation adjustment mechanism to the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), starting in 2018. Some experts believe that the latter index provides a more accurate measure of inflation among consumer goods and services than the CPI-U. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2020 Personal Exemption and Phaseout: $0 (suspended through the end of 2025) Standard Deduction: Joint $24,800 Single $12,400 Head of Household $18,650 Additional Standard Deduction for the Elderly or the Blind: Joint (each spouse) $1,300 Single/Head of Household $1,650 Congressional Research Service Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption Limitation on Itemized Deductions: Suspended through the end of 2025 Statutory Marginal Income Tax Rates, 2020 Joint Returns If taxable income is: Then, tax is: $0 to $19,750 10% of the amount over $0 over $19,750 to $80,250 $1,975 + 12% of the amount over $19,750 over $80,250 To $171,050 $9,235 + 22% of the amount over $80,250 over $171,050 to $326,600 $29,211 + 24% of the amount over $171,050 over $326,600 to $414,700 $66,543 + 32% of the amount over $326,600 over $414,700 to $622,050 $94,735 + 35% of the amount over $414,700 over $622,050 $167,307.50 + 37% of the amount over $622,050 Single Returns If taxable income is: Then, tax is: $0 to $9,875 10% of the amount over $0 over $9,875 to $40,125 $987.50 + 12% of the amount over $9,875 over $40,125 to $85,525 $4,617.50 + 22% of the amount over $40,125 over $85,525 to $163,300 $14,605.50 + 24% of the amount over $85,525 over $163,300 to $207,350 $33,271.50 + 32% of the amount over $163,300 over $207,350 to $518,400 $47,367.50 + 35% of the amount over $207,350 over $518,400 $156,235 + 37% of the amount over $518,400 Head-of-Household Returns If taxable income is: Then, tax is: $0 to $14,100 10% of the amount over $0 over $14,100 to $53,700 $1,410 + 12% of the amount over $14,100 over $53,700 to $85,500 $6,612 + 22% of the amount over $53,700 over $85,500 to $163,300 $13,15 8 + 24% of the amount over $85,500 over $163,300 to $207,350 $31,830 + 32% of the amount over $163,300 over $207,350 to $518,400 $45,926 + 35% of the amount over $207,350 over $518,400 $154,793.50 + 37% of the amount over $518,400 Source: IRS Revenue Procedure 2019-44. Congressional Research Service Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption Contents Introduction ................................................................................................................... 1 Overview of Key Individual Income Tax Elements ............................................................... 2 Tax Rates and Brackets............................................................................................... 2 Personal Exemption ................................................................................................... 2 Itemized Deductions and the Standard Deduction ........................................................... 2 Inflation, Bracket Creep, and Indexation ............................................................................. 3 Tax Tables from 1988 to 2021 ........................................................................................... 5 Tables Table 1. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2021 ................ 5 Table 2. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2020 ................ 6 Table 3. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2019 ................ 7 Table 4. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2018 ................ 8 Table 5. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2017 ................ 9 Table 6. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2016 .............. 11 Table 7. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2015 .............. 12 Table 8. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2014 .............. 13 Table 9. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2013 .............. 15 Table 10. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2012 ............................................................................................................... 16 Table 11. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2011................................................................................................................ 17 Table 12. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2010 ............................................................................................................... 18 Table 13. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2009 ............................................................................................................... 19 Table 14. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory Marginal Tax Rates, 2008 ............................................................................................................... 21 Congressional Research Service Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption Table 15. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions, Personal Exemption Phaseout Thresholds, and Statutory
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