Understanding the 2021 AZ Income Tax Brackets

The 2021 Arizona income tax brackets have changed, and it's essential for individuals to understand how these changes will impact their taxes. In this article, we'll break down the new federal income tax brackets and provide guidance on how to determine your approximate 2021 federal taxes.

Calculating Your Federal Taxes

To calculate your federal taxes, you need to know where you stand in the income tax bracket. The first bracket has a maximum total tax of $7,353 for an annual income of up to $90,000. If your income is higher than this range, you'll be taxed at different rates.

Let's take a closer look at how this works. Suppose you have an annual income of $90,000 and find yourself in the second bracket. To calculate your federal taxes, add the maximum total tax from the previous bracket to approximate your 2021 federal taxes. Then, subtract the minimum dollar value of that range from your annual income and multiply by the applicable tax rate.

Understanding the Tax Rates

Canada's federal income tax brackets are set up in tiers with rates that apply only to the earnings that fall within each tier. The income over and above the first bracket limit will be taxed at a rate of 20.5%. For example, if you're in the second federal bracket with an annual income of $90,000, you would pay 15% on your first $49,020 in earnings.

Deductions and Credits

Keep in mind that these are 'estimated' federal tax owing and do not include deductions or credits that can reduce the taxes you owe. This means you will pay 15% in federal tax, or about $6,000, not including deductions.

Understanding the 2021 AZ income tax brackets is crucial for individuals to accurately calculate their federal taxes. By following these steps and considering your individual circumstances, you'll be better equipped to determine your approximate 2021 federal taxes.

2021 az income tax brackets