Summary
The IRS has announced new tax brackets and increased standard deductions for the 2026 tax year, which will slightly reduce income taxes for many Americans. These changes are part of a new law that makes provisions from the 2017 tax overhaul permanent and introduces additional increases in deductions and credits. The updated tax brackets help prevent "bracket creep," where inflation pushes taxpayers into higher tax brackets without actual income growth.
Key Facts
- The IRS announced inflation adjustments for more than 60 tax provisions for the 2026 tax year.
- New tax brackets and standard deductions will apply to 2026 tax returns filed in 2027.
- The legislation made key provisions from the 2017 tax overhaul permanent and added new increases.
- The new standard deduction for 2026 is $32,200 for married couples, $16,100 for singles, and $24,150 for heads of household.
- The estate tax exclusion will increase to $15 million in 2026, up from $13.99 million in 2025.
- The Earned Income Tax Credit (EITC) will rise to $8,231 for families with three or more children for 2026.
- A new $6,000 federal tax deduction for those 65 and older will begin in 2025.
- Tipped workers will not pay federal income tax on their tips starting in 2025, but must report them for Social Security and Medicare.
