IRS Announces New Tax Brackets and Deductions for 2026

The Internal Revenue Service (IRS) has released updated federal income tax brackets and standard deductions for the year 2026, which may offer some relief to taxpayers getting ready for next year’s filings.

Typically, the IRS makes these adjustments in October or November to address “bracket creep.” This can happen when inflation pushes taxpayers into higher income levels, which means they might end up paying more tax in April, despite their actual purchasing power staying the same.

What Will Change in 2026?

In 2026, individuals with a taxable income over $640,600 and married couples filing jointly with incomes over $768,700 will fall under the top tax rate of 37%. Additionally, the IRS has increased eligibility thresholds for long-term capital gains, gift tax exemptions, and earned income tax credits, according to reports.

The standard deductions have also seen an increase:

• Married couples filing jointly can claim deductions between $31,500 and $32,200.
• Single taxpayers can receive deductions from $15,750 to $16,100.
• Heads of households will receive a deduction of $24,150.

Seniors might enjoy further tax breaks under the One Big Beautiful Bill Act. Individuals aged 65 and older can take advantage of a one-time deduction of up to $6,000, applicable through the end of 2028, but only if their incomes are $75,000 or less, or $150,000 or less for couples.

IRS Operations During Closure

However, the IRS has indicated that furloughs will commence in October due to a lack of federal funding linked to the government shutdown. That said, those with an extension deadline of October 15 are still expected to file their taxes as usual.

An IRS spokesperson reassured taxpayers, stating, “Taxpayers should continue to file, remit, and pay their federal income taxes as usual. The expiration of appropriations does not change their federal income tax liability.”

Understanding Taxes

Taxation in the U.S. operates on a progressive scale, meaning higher incomes are taxed at higher rates. The brackets include 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For example, a married couple earning $150,000 would, after applying the standard deduction of $32,200 in 2026, have a taxable income of $117,800. They would fall under the marginal tax rate of 22%, but their effective tax rate would be lower.

• 10% on the first $24,800 = $2,480
• 12% on $24,800 to $100,800 = $9,120
• 22% on $100,800 to $117,800 = $3,740

This setup would lead to a total federal income tax of $15,340, translating to an effective tax rate of about 13%.