2021 Tax Planning - Understand Where Your Federal Tax Dollars Go

Sep 19, 2026

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2021 Tax Planning explains how federal tax dollars are allocated across major spending categories and describes key tax-year changes that may affect taxpayers. It reviews major budget areas such as healthcare-related subsidies, defense and security spending, and Social Security benefits. The guide also highlights COVID-19 related tax relief, outlines 2021 tax brackets and standard deduction changes, and provides a practical timeline of key 2021 filing and estimated tax payment deadlines.

LanguageEnglish

CategoryGeneral

FormatPDF

Pages10

Reading Time4 min

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Understand Where Your Federal Tax Dollars Go

Major Spending Areas

How to Prepare for the Tax Season

COVID-19 and 2020 Tax Updates

The Tax Brackets

Standard Deductions Overview

2021 Tax Planning Calendar

January 15, 2021

April 15, 2021 and Extensions

Estimated Tax Payments (First to Third Quarter)

June 15 and September 15, 2021

October 15, 2021

2021 Tax Planning UNDERSTAND WHERE YOUR FEDERAL TAX DOLLARS GO In this guide, we will explore where your tax dollars go and some of the ways tax filing may look different in 2021 as well as what you can do to prepare. Keep in mind, this guide is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your strategy. Before we dive into the upcoming tax brackets and what you can do to prepare for 2021, it can be helpful to understand precisely where the government allocates your federal tax dollars. In 2019, the federal government spent $4.4 trillion, which equals 21% of the nation’s gross domestic product (GDP) . Further examination reveals that three significant areas of spending make up the majority of the budget.1 HOW TO PREPARE FOR THE 2020 TAX SEASON MEDICARE, MEDICAID, MARKETPLACE SUBSIDIES, AND CHIP The Medicare, Medicaid, Affordable Care Act (ACA) marketplace subsidies, and Children’s Health Insurance Program (CHIP) together accounted for $1.1 trillion in 2019 or 25% of the budget.1 WWW.AMICUS-PARTNERS.COM (785) 587-9033 DEFENSE SPENDING Another $697 billion was paid for defense and security-related international activities. The bulk of the spending in this category reflects the underlying costs ofthe Defense Department. This includes the cost of multiple defense initiatives and related activities, described as Overseas Contingency Operations in the budget.1 SOCIAL SECURITY Twenty-three percent of the budget, or $1 trillion, was paid for Social Security, which provided monthly retirement benefits averaging $1,503 to 45 million retired workers. Social Security also provided benefits to 3 million spousesand children of retired workers, 6 million surviving children and spouses of deceased workers, and 10 million disabled workers and their eligible dependents in December 2019.1 A NOTE REGARDING COVID-19 AND 2020 As many are no doubt aware, the coronavirus pandemic wrought massive changes to the financial landscape. Although it is highly unlikely that the same scale of change will be seen in 2021, these historic changes are worth noting. In 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law, giving taxpayers the option to skip required minimum distributions (RMDs) from traditional individual retirement accounts (IRAs) and 401(k)-style plans. In addition, the IRS allowed taxpayers an extension until July 15 to file their Form 1040. July 15 was also the deadline to pay any federal taxes owed for 2019.2,3 THE TAX BRACKETS The tax brackets are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.4 Here are the tax brackets and the corresponding income ranges:4 2020 TAX RATE SINGLE MARRIED FILING JOINTLY 10% 12% 22% 24% 32% 35% 37% $0 to $9,875 $9,876–$40,125 $40,126–$85,525 $85,526–$163,300 $163,301–$207,350 $207,351–$518,400 $518,401+ $0 to $19,750 $19,751–$80,250 $80,251–$171,050 $171,051–$326,600 $326,601–$414,700 $414,701–$622,050 $622,051+ These modest changes to the tax brackets also mean that wage earners may fall into lower brackets. Here is one example. A single filer at $83,000 in taxable income would fall into the 24% bracket for tax year 2018. The filer would be in the 22% tax bracket in 2020. These new rates are scheduled to expire in 2025 unless Congress acts to make them permanent. Exemptions also changed under the new tax code. Here is an overview of the standard deductions since 2018:5 TAX YEAR 2020 2019 2018 | Single | $12,400 | $12,200 | $12,000 | | --- | --- | --- | --- | | Married filing jointly | $24,800 | $24,400 | $24,000 | | Married filing separately | $12,400 | $12,200 | $12,000 | | Head of household | $18,650 | $18,350 | $18,000 | | Personal
exemption | Repealed | Repealed | Repealed | The higher standard deductions may make them more attractive (compared with itemizing) for many taxpay

FAQs

What major categories account for most federal spending according to the guide?

The guide identifies healthcare-related subsidies (including Medicare, Medicaid, marketplace subsidies, and CHIP), defense and security-related international activities, and Social Security as the major areas making up most of the budget.

How did COVID-19 measures affect tax-related rules for 2020?

The guide notes that the CARES Act allowed taxpayers to skip required minimum distributions (RMDs) from traditional IRAs and 401(k)-style plans, and that the IRS extended the deadline for filing Form 1040 until July 15.

What are key 2021 deadlines covered in the tax planning calendar?

The calendar highlights January 15 for certain quarterly estimated tax payments, April 15 for most 2020 individual returns and for requesting extensions, April 15 for IRA contributions, June 15 and September 15 for estimated tax payments, and October 15 for extended individual tax returns.

Sep 19, 2026

Upload by Quinn