Every year, the IRS updates federal tax brackets, standard deductions, and other key thresholds to account for inflation. This year, the IRS update also included changes introduced under the One Big Beautiful Bill Act (OBBBA). These changes will affect taxes incurred during 2026 and returns filed in 2027. Here is a detailed summary of what taxpayers should expect and how to prepare.

Understanding Marginal Tax Brackets

Federal income taxes are based on a progressive, marginal system. This means different portions of your income are taxed at different rates. This progressive structure means that only the income above each threshold is taxed at the higher rate, not your entire income.

2026 Federal Tax Brackets

The IRS maintains seven marginal tax rates for 2026: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. While the rates themselves remain unchanged, the income thresholds for each bracket have been adjusted for inflation.

• Single filers: The 37% top bracket starts at $640,600
• Married filing jointly: The top bracket begins at $768,700
• Heads of household: The 37% rate starts at $725,200

Here is the full breakdown of the tax brackets for 2026:

2026 Standard Deductions

The standard deduction (the amount you can subtract from your income before taxes) has also been adjusted for inflation:

• Single / Married filing separately: $16,100
• Married filing jointly: $32,200
• Head of household: $24,150

In addition, the OBBBA introduced a temporary Senior Bonus Deduction for taxpayers age 65 and older (or blind), which can add up to $6,000 to the standard deduction depending on income and filing status.

Additional 2026 IRS Adjustments

The IRS also increased thresholds for other tax-related figures, including credits, exclusions, and exemptions. Here are some of the most relevant updates:

How to Prepare for the 2026 Tax Year

Taxpayers should review their current tax strategies in light of these changes. A few tips:

• Bracket Management: Consider income timing strategies if you’re near a higher bracket threshold.
• Deduction Planning: If you’re close to the standard deduction amount, plan charitable contributions and deductions accordingly.
• Retirement Contributions: Maximize 401(k) and IRA contributions under the new limits.
• Work With a Professional: A financial advisor can help you plan strategically around deductions, income, and investment tax strategies.

Preparing to file your 2025 taxes

2025 is rapidly coming to a close, but you can still make a few tax moves before the end of the year. Consider speaking with a financial advisor if you have any questions about incorporating tax strategies into your financial plan. 

This information is not intended to provide individualized tax or legal advice. Discuss your specific situation with a qualified tax or legal professional.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA. Investing involves risk, including possible loss of principal.