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Key takeaways
- The IRS announced that tax brackets for the 2026 tax year increased by about 2.3% to keep up with inflation and ensure Americans pay the same percentage of taxes.
- The “big, beautiful bill” retroactively increased the standard deduction for the 2025 tax year. For tax year 2026, the increase is expected to be approximately 2.2%.
- Other tax credits, such as the Earned Income Tax Credit and the Estate Tax Credit, were similarly increased to reflect inflation rates.
The IRS on Thursday announced new tax brackets for the 2026 tax year.
Tax bracket income levels for 2026 taxes, filed in 2027, rose to reflect wage inflation. Other changes from the “Big and Beautiful Bill,” also known as OBBB, were made to tax credits and deductions, some of which will save Americans money on their tax bill.
Why is this important to you?
Understanding the annual changes to tax brackets and deductions will help you decide on your household budget, investments and other financial matters in the new year.
For 2026, tax brackets increased by just under 2.3%, which is less than the adjustment made last year. The annual increases are intended to ensure that Americans always pay the same rate of taxes on their income. So, unless you get a raise of more than 2.3% in 2026, you won’t be taxed at the higher rate.
| Increase in tax brackets for the year 2026 by about 2.3% | |||||
|---|---|---|---|---|---|
| Tax rate | 2025 Single or married filing separately | 2026 Single or married filing separately | 2025 Married, filing jointly | 2026 Married, filing jointly | |
| 37% | $626,351 or more | $640,601 or more | $751,601 or more | $768,701 or more | |
| 35% | $250,526 – $626,350 | $256,226 – $640,600 | $501,051 – $751,600 | $512,451 – $768,700 | |
| 32% | $197,301 – $250,525 | $201,776 – $256,225 | $394,601-501,050 | $403,551 – $512,450 | |
| 24% | $103,351 – $197,300 | $105,701 – $201,775 | $206,701 – $394,600 | $211,401 – $403,550 | |
| 22% | $48,476 – $103,350 | $50,401 – $105,700 | $96,951 – $206,700 | $100,801 – $211,400 | |
| 12% | $11,926 – $48,475 | $12,400 – $50,400 | $23,851 – $96,950 | $24,801 – $100,800 | |
| 10% | $11,925 or less | $12,400 or less | $23,850 or less | $24,800 or less | |
The OBBB expands President Donald Trump’s Tax Cuts and Jobs Act, retroactively increasing the standard deduction for 2025 taxes, which will be introduced in April. The bill increases the 2025 deduction for single taxpayers and married individuals filing separately by $750 and $1,125. For heads of household, and $1,500 for married couples who file a joint application.
The standard deduction, used by those who don’t itemize their deductions, increases by about 2.2% for tax year 2026.
| The standard deduction for 2026 is up about 2.2% from last year | |||
|---|---|---|---|
| Tax year | Single or married filing separately | Married filing jointly | Heads of household |
| 2025 | $15,750 | $31,500 | $23,625 |
| 2026 | $16,100 | $32,200 | $24,150 |
Some other tax items that are adjusted for inflation and OBBB:
- Earned income tax credits: This credit lowers the tax bill for taxpayers with children whose income falls below a certain threshold. For 2026, the maximum credit amount that can be taken increases by $185 to $8,231.
- Alternative minimum tax exemption: For 2026, the exemption amount for single taxpayers increased by $2,000 to $90,100, and for married couples filing jointly, it increased by $3,200 to $140,200. However, the OBBB restricts who can benefit from the exemption by lowering the income level at which it phases out.
- Real estate tax credit: Taxpayers who receive assets or money from a descendant who dies in 2026 can exclude up to $15 million from their taxes, an increase of more than $1 million from 2025.
- Accreditation credits: Those who adopt a child in 2026 can claim up to $17,670 in adoption expenses, an increase of $390 from 2025.
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