Inflation Adjustments and New Legislation Could Potentially Lower Your Effective Tax Rate in 2026.
The 2026 Tax Brackets Have Been Released With Some Potentially Positive News.
The new 2026 IRS tax brackets are out, and while the number of tax brackets and rates remains the same, several key elements have changed, namely the income thresholds—the amount of income to reach the next tax bracket—, and the standard deductions. Both are higher. The net result could be an effective lowering of taxes for some individuals and couples, especially lower and middle-class Americans. If your income in 2026 is similar to 2025, you might see your tax liabilities decrease. We have inflation adjustments and the "One Big Beautiful Bill" to thank.
A snapshot of a few select threshold changes (single filers) from 2025 → 2026:
| Marginal Rate | 2025 Threshold (Approximate) | 2026 Threshold (Approximate) |
| 12% | ~$11,925 | ~$12,400 |
| 22% | ~$48,475 | ~$50,400 |
| 37% | ~$626,350 | ~$640,600 |
These are approximate values; refer to IRS or Revenue Procedure publications for official tables.
Below is a comprehensive overview of the 2026 tax brackets and other key components.
2026 Federal Income Tax Brackets & Thresholds:
Below is a summary of the marginal tax rates and income thresholds for 2026 (for taxable income) under current law (including adjustments from the One Big Beautiful Bill):
| Rate | Single/Married Filing Separately | Married Filing Jointly/ Surviving Spouse | Head of Household |
| 10% | Up to $12,400 | Up to $24,800 | Up to $17,700 |
| 12% | $12,400 to $50,400 | $24,800 to $100,800 | $17,700 to $67,450 |
| 22% | $50,400 to $105,700 | $100,800 to $211,400 | $67,450 to $103,700 |
| 24% | $105,700 to $201,775 | $211,400 to $403,550 | $103,700 to $201,775 |
| 32% | $201,775 to $256,225 | $403,550 to $512,450 | $201,775 to $256,225 |
| 35% | $256,225 to $640,600 | $512,450 to $766,700 | $256,225 to $640,600 |
| 37% | Over $640,660 | Over $766,700 | Over $640,600 |
- The top marginal rate remains 37%, applicable above $640,600 for single filers and $768,700 for married filing jointly.
- The lower brackets (10% and 12%) see slightly larger inflation adjustments under law, while the other brackets are adjusted by about 2.3%.
Other key 2026 Tax Parameters
- Standard Deduction -Single/Married Filing Separately: $16,100 -Married Filing Jointly/Surviving Spouses: $32,200 -Head of Household: $24,150.
- Alternative Minimum Tax (AMT) Exemptions -Single/MFJ separately: Exemption $90,100, phase-out starts at $500,000 -Married Filing Jointly: Exemption $140,200, phase-out begins $1,000,000.
- Estate Tax Exclusion -The basic exclusion rises to $15 million (single) and $30 million (joint).
- Annual Gift Tax Exclusion -Remains the same at $19,000 (single) and $38,000 (joint).
- Other indexed items -Earned Income Tax Credit (3+ children): $8,231 minimum -Qualified transportation fringe (parking/transit) monthly cap: $340 - Health Savings Accounts (HSA) Contribution Limits: $4,400 (single) and $8,750 (family) - Health Flexible Spending (FSA) limit: $3,400 -Foreign Earned Income Exclusion: $132,900.
Interested in learning more? Please contact Gerry at Linden Wealth Management LLC.
This article is intended for information purposes only. You should consult with a tax advisor. It is important to remember that all investing involves risk. This content is developed from sources believed to provide accurate information and provided by Twenty Over Ten and Linden Wealth Management LLC. It may not be used to avoid any federal tax penalties. Please consult legal or tax professionals for specific information regarding your situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.