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Tax Rate Schedules: 2021

The 2021 tax rate schedules below are provided to help you determine your marginal tax bracket at the federal and state level.  Locate your taxable income in the appropriate tax filing (single, joint, etc.) to estimate which marginal tax bracket you are in.

It is important to know your marginal tax bracket to understand the tax consequences of additional income.  For example, if your spouse and you earn $250,000 from your jobs and have $40,000 of various deductions, your taxable income would be $210,000.  As a “married filing jointly” couple in North Carolina, you would be in the 24% tax bracket at the federal level and 5.25% at the state level, for a combined tax rate of 29.25%.  That means that any additional income would be taxed at 29.25%. 

Additional taxable income may come from interest from bank accounts and/or dividends and capital gains from taxable investments.  In this scenario, if you earned an additional $5,000 in interest and dividends, your additional tax liability would be approximately $1,462.50 ($5,000 * 29.25%) leaving you really with $3,537.50.  With this knowledge, a few questions arise:

  • What interest rates are taxable bonds and money markets paying compared to tax-exempt bonds and money markets?
  • Does it make sense to invest in a tax-exempt bonds and money market fund for my savings?
  • Is my investment strategy and the investments in my taxable account appropriate?
  • Can I shelter any more income?

Tax efficient investing is important to not only reduce your current tax liabilities, but to manage your future tax liabilities as well.  It also helps generate better after-tax returns.  Contact us to discuss further.

2021 Taxable Income Brackets & Rates

Federal

Rate

Single

Married Filing Jointly

Head of Household

10%

$0 - $9,9950

$0 – $19,900

$0 - $14,200

12%

$9,951 - $40,525

$19,901 - $81,050

$14,201 - $54,200

22%

$40,526 - $86,375

$81,051 - $172,750

$54,201 - $86,350

24%

$86,376 - $164,925

$172,751 - $329,850

$86,351 - $164,900

32%

$164,926 - $209,425

$329,851 - $418,850

$164,901 - $209,400

35%

$209,426 - $523,600

$418,851 - $628,300

$209,401 - $523,600

37%

$523,601 +

$628,301 +

$523,601 +

North Carolina

5.25% on taxable income.

2021 Taxable Income Rates on Long Term Capital Gains

Rate Single Married Filing Jointly Heads of Household
0% $0 $0 $0
15% $40,400 $80,800 $54,100
20% $445,850 $501,600 $473,750
  Additional Net Investment Income Tax
3.8% MAGI above
$200,000
MAGI above
$250,000
MAGI above
$200,000
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