IRS Updates Income Tax Brackets for 2026

The Internal Revenue Service has released new federal income tax brackets for the year 2026. These updates outline the income ranges that will determine federal income tax obligations and include adjustments to the standard deduction, which reduces taxable income.

Changes to the brackets indicate about a 4% increase for low-income earners and around 2% for those in higher income brackets. These adjustments happen annually to reflect inflation and will take effect in 2026 for taxes filed in 2027.

But it’s not just tax brackets and deductions that are getting an update. The IRS has also increased the maximum earnings eligible for the Earned Income Tax Credit (EITC).

Understanding the EITC

The EITC aims to assist low- to moderate-income workers and their families, helping to lessen tax liabilities or boost tax refunds.

This credit is “fully refundable,” which essentially means that even if you owe no taxes, you could still receive an increased refund.

For the 2026 tax year, the threshold for this credit rises from $8,046 in 2025 to a new cap of $8,231.

Specifically, a family with two children can qualify for a maximum EITC of $7,316, up from $7,152 in 2025. Individuals with one child can receive up to $4,427, an increase from $4,328. Meanwhile, qualifying adults without children may get up to $664 in 2026, compared to $649 previously.

To be eligible for this tax credit, filers need to have an adjusted gross income (AGI) that falls below certain levels.

Here are those thresholds:

Married couples filing jointly will face a complete phase-out of the EITC at:

• AGI of $70,224 for families with three or more children.
• AGI of $65,899 with two children.
• AGI of $58,863 for individuals with one child.
• AGI of $26,820 for those without children.

For single filers, heads of household, or widowed individuals, the EITC is fully phased out at:

• AGI of $62,974 for families with three or more children.
• AGI of $58,629 for families with two children.
• AGI of $51,593 for one child.
• AGI of $19,450 for no children.

Moreover, taxpayers cannot exceed $12,200 in investment income in 2026 to remain eligible for the EITC.