Rates stay the same 2026, while thresholds and deductions rise a bit.
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Each year, the Internal Revenue Service (IRS) adjusts federal tax thresholds for inflation so the increase in prices alone wonât nudge you into a higher bracket. If your income grows roughly in line with overall costs, your tax rate should stay about the same. For 2026, the bracket cutoffs and standard deduction thresholds are a bit higher.
Knowing the changes taking place in the 2026 tax yearâfor the return youâll file in 2027âis useful for financial planning. You can recalibrate paycheck withholding, decide how much to put into a 401(k) retirement plan or flexible spending account (FSA), and think about timing income or deductible expenses if youâre nearing a bracketâs limit.
Key Points
- The amounts for the standard deduction are up roughly 2% for 2026 compared to the previous tax year.
- Marginal tax rates are unchanged, but bracket thresholds have risen modestly.
- Several common limits, such as the earned income tax credit and foreign earned income exclusion, have also increased with inflation.
Federal income tax brackets for 2026
The seven tax ratesâ10%, 12%, 22%, 24%, 32%, 35%, and 37%âhavenât changed. What has changed are the income ranges for each rate.
The roughly 2% increase in each bracket may mean your income can rise slightly without triggering a higher tax rate, often called âbracket creep.â
| Rate | Single files | Married filing jointy | Head of household |
|---|
| 10% | Up to $12,400 | Up to $24,800 | Up to $17,700 |
| 12% | $12,401â$50,400 | $24,801â$100,800 | $17,701â$67,450 |
| 22% | $50,401â$105,700 | $100,801â$211,400 | $67,451â$105,700 |
| 24% | $105,701â$201,775 | $211,401â$403,550 | $105,701â$201,750 |
| 32% | $201,776â$256,225 | $403,551â$512,450 | $201,751â$256,200 |
| 35% | $256,226â$640,600 | $512,451â$768,700 | $256,201â$640,600 |
| 37% | $640,601 and over | $768,701 and over | $640,601 and over |
Higher standard deduction
The standard deduction (the amount many taxpayers subtract from income instead of itemizing) has increased for 2026:
- $32,200 for married couples filing jointly ($31,500 for 2025)
- $16,100 for single filers ($15,750 for 2025)
- $24,150 for heads of household ($23,625 for 2025)
Adjustments to credits and limits
Several credits and exclusions are also indexed for inflation.
- Earned income tax credit (EITC): The maximum credit rises to $8,231 for families with three or more qualifying children from $8,046 for 2025. Other maximums for 2026 are $7,316 (two children), $4,427 (one child), and $664 (no children).
- Foreign earned income exclusion: Increases to $132,900 ($130,000 in 2025).
- Alternative minimum tax (AMT): The exemption climbs to $90,100 for single filers and $140,200 for joint filers. (The figures for 2025 are $88,100 and $137,000, respectively.)
- Estate and gift tax exclusion: The amount excluded from estate taxes increases to $15 million for each estate (up from $13,990,000 for 2025). The annual exclusion for gifts is $19,000 for 2026, unchanged from 2025. But the exclusion for gifts to a spouse who is not a U.S. citizen rises to $194,000, a $4,000 increase from the previous year.
Health accounts
- Health flexible spending accounts (FSAs). You can set aside up to $3,400 in 2026, up $100 from 2025. If your plan allows carryovers, you can roll up to $680 into the next plan year, a $20 increase.
- Health savings accounts (HSAs). If youâre covered by a high-deductible health plan, the 2026 limits tick up to $4,400 for individual coverage ($100 more than in 2025) or $8,750 for family coverage in 2026 (up $200). To qualify as an HSA-eligible plan, the minimum deductible rises to $1,700 for individuals ($3,400 for family), up from $1,650 and $3,300, respectively, and the out-of-pocket maximum increases to $8,500 (individual) and $17,000 (family), up from $8,300 and $16,600 in 2025.
- Medical savings accounts (Archer MSAs). For those few who still have MSAs, the thresholds nudge higher for 2026. Individual coverage must have a deductible of $2,900 to $4,400, with an out-of-pocket maximum of $5,850. Family coverage requires a deductible of $5,850 to $8,750, with a $10,700 out-of-pocket cap. In 2025, the ranges were $2,850 to $4,300 with a $5,700 cap for individual coverage, and $5,700 to $8,550 with a $10,500 cap for family coverage.
Impact of new legislation
The One Big Beautiful Bill Act, enacted in 2025, made permanent many of the lower tax rates and higher deductions introduced in 2017 by the Tax Cuts and Jobs Act. It also created or expanded several provisions, including:
AGI vs. MAGI
Your adjusted gross income (AGI) is your total income minus certain deductions, like student loan interest or contributions to a traditional individual retirement account (IRA). Your modified adjusted gross income (MAGI) starts with AGI but adds some of those deductions back. For example, suppose you earn $50,000 and claim a $2,000 IRA deduction and $1,500 in student loan interest. Your AGI would be $46,500. For the student loan interest deduction, the amount of interest paid is added back when figuring MAGI, so your MAGI would be $48,000.
- Senior deduction. Up to $6,000 for taxpayers age 65 and older if modified adjusted gross income (MAGI) is under $75,000 for single filers and $150,000 for those married filing jointly (available through 2028). This deduction is available whether you take the standard deduction or itemize.
- SALT cap increase. The deduction for state and local taxes (SALT) has increased to $40,000 from $10,000, with phaseouts for high earners. It reverts to $10,000 in 2030.
- Deduction for overtime pay. Nonexempt employees who work more than 40 hours a week can claim a deduction of up to $12,500 ($25,000 for joint filers) of overtime pay, even if you donât itemize. The deduction phases out for single filers with MAGI above $150,000 and joint filers above $300,000.
- Tip income deduction. Up to $25,000 in reported tip income can be excluded from your taxable income, regardless of whether you take the standard deduction or itemize. The phaseouts are the same as for the overtime deduction.
- Car loan interest deduction. New vehicles assembled in the U.S. for personal use in 2025 through 2028 are eligible for a deduction of up to $10,000 in annual loan interest. The deduction phases out with MAGI above $100,000 for single filers and $200,000 for joint filers.
What stays the same for 2026
Not every number gets a bump because of inflation. These items stay the same:
- Personal exemptions. Still zero for 2026. The exemption was eliminated by the 2017 tax law and made permanent by the One Big Beautiful Bill Act.
- Itemized deductions. The prior income-based reduction (the Pease rule) doesnât apply. Taxpayers in the top 37% bracket are subject to a separate cap on the tax benefit of itemized deductions.
- Lifetime learning credit. The income range where this credit phases out is still $80,000 to $90,000 for single filers and $160,000 to $180,000 for married couples filing jointly, based on MAGI.
Why annual adjustments matter
Even small inflation tweaks can affect your tax bill. Knowing the 2026 numbers now can help you:
If you earn a salary or hourly wages and receive a W-2 each year, you generally donât need to submit a new Form W-4 because of annual bracket adjustments. Payroll systems automatically incorporate IRS updates. Consider an adjustment only if there was a significant change or event: multiple jobs, a spouse starting or stopping work, a large raise or bonus, significant nonwage income, or if you owed a lot or received a large tax refund in the previous year.
The 2026 brackets donât change the rules, just the numbers. But paying attention to them can help you fine-tune your finances before the next tax season rolls around.
This article was most recently revised and updated by David ScheppThis article was most recently revised and updated by Nancy Ashburn
