The IRS recently announced new federal income tax brackets and standard deductions for 2026. According to this announcement, the income limits for each tax bracket have been raised. This means that more people will now have their income taxed at a lower tax rate. These changes will apply to tax year 2026, and returns will be filed in 2027.
In addition, the IRS has also increased deductions and thresholds for other provisions, including long-term capital gains brackets, estate and gift tax exemptions, and eligibility for the Earned Income Tax Credit. This move is intended to provide relief to average American taxpayers and mitigate the impact of inflation.
In 2026, the highest tax rate of 37% will apply to individuals with taxable incomes exceeding $640,600. Married couples filing jointly will be taxed at a rate exceeding $768,700.
Increase in Standard Deduction
In 2026, the standard deduction has also been increased. For married couples filing jointly, the standard deduction has increased to $32,200, up from $31,500 in 2025. For single filers, the deduction will be $16,100, up from $15,750 last year.
This change will provide taxpayers with a greater income tax break and cushion the rising impact of inflation. Note that these announcements come at a time when the IRS announced that nearly half the workforce will be furloughed due to the shutdown.
Brackets for Married Couples for the 2026 Tax Year
The table below details the 2026 tax brackets for married couples (Married Filing Jointly). This shows how much tax will be levied on each taxable income:
| Taxable Income | Tax Rate |
|---|---|
| $0 to $24,800 | 10% of taxable income |
| $24,801 to $100,800 | $2,480 + 12% of amount over $24,800 |
| $100,801 to $211,400 | $11,600 + 22% of amount over $100,800 |
| $211,401 to $403,550 | $35,932 + 24% of amount over $211,400 |
| $403,551 to $512,450 | $82,048 + 32% of amount over $403,550 |
| $512,451 to $768,700 | $116,896 + 35% of amount over $512,450 |
| $768,701 or more | $206,583.50 + 37% of amount over $768,700 |
Single Filer Slabs for the 2026 Tax Year
Tax slabs for single filers have also been increased. The table below provides the tax rates for each category:
| Taxable Income | Tax Rate |
|---|---|
| $0 to $12,400 | 10% of taxable income |
| $12,401 to $50,400 | $1,240 + 12% of amount over $12,400 |
| $50,401 to $105,700 | $5,800 + 22% of amount over $50,400 |
| $105,701 to $201,775 | $17,966 + 24% of amount over $105,700 |
| $201,776 to $256,225 | $41,024 + 32% of amount over $201,775 |
| $256,226 to $640,600 | $58,448 + 35% of amount over $256,225 |
| $640,601 or more | $192,979.25 + 37% of amount over $640,600 |
Impact of the New Slabs on Taxpayers
These new slabs and the increased standard deduction directly impact taxpayers’ pockets. If your income has increased compared to previous years, the increased income thresholds will help you stay at a lower tax rate. However, the 37% top rate applicable to high-income taxpayers may increase their tax amount.
These updates are also important for long-term investments, gifting, and estate planning. For example, the increased long-term capital gains brackets will provide investors with an opportunity to adjust their strategies.
Tax Planning and Preparation Tips
- Estimate Your Projected Income: Estimate your 2026 projected income and investments before filing your tax return.
- Compare standard and itemized deductions: See which option will be beneficial for you.
- Consider retirement and investments: Incorporate long-term capital gains and retirement contributions into your tax planning.
- Keep an eye on the latest IRS announcements: Tax rules are updated annually, so rely on official information.
Conclusion
The IRS’s increase in income tax slabs and standard deductions for 2026 provides both relief and planning opportunities for taxpayers. This change will provide relief to average American families amid high inflation, while the top tax rate will remain applicable to high-income taxpayers.
You are advised to update your 2026 tax planning immediately and ensure you are taking maximum advantage of the new slabs and deductions.
FAQs
Q. What are the new federal income tax brackets for 2026?
A. The IRS raised income thresholds for all tax brackets, with the top rate of 37% applying to individuals earning over $640,600 and joint filers over $768,700.
Q. What is the standard deduction for 2026?
A. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.
Q. When will these 2026 tax brackets apply?
A. These brackets apply to taxable income earned in 2026, with returns filed in 2027.
Q. How does the marginal tax rate system work?
A. You pay the listed percentage on each portion of your income within a bracket, not your total income at the highest rate.
Q. Will these changes affect other tax provisions?
A. Yes, the IRS also adjusted long-term capital gains brackets, estate and gift tax exemptions, and eligibility for the Earned Income Tax Credit.
