Table of Contents
IRS Tax Changes for 2026 – As we head into 2026, taxpayers are facing a landscape shaped by recent legislation and annual inflation adjustments from the IRS. The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, plays a pivotal role by extending many provisions from the Tax Cuts and Jobs Act (TCJA) that were set to expire, while introducing new deductions and credits to provide relief amid rising costs. This prevents a reversion to pre-2018 tax rules, which would have meant higher rates and lower deductions for many. In this comprehensive guide, we’ll break down the major IRS tax changes for 2026, including updated tax brackets, deductions, and contribution limits. These apply to income earned in 2026, with returns filed in 2027.
Whether you’re a single filer, married couple, or retiree, understanding these 2026 tax updates can help you plan ahead and potentially save money. Let’s dive into the details.
2026 Federal Income Tax Brackets
The IRS has adjusted the income thresholds for federal tax brackets upward due to inflation, maintaining the seven progressive rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These adjustments help prevent “bracket creep,” where inflation pushes taxpayers into higher brackets without real income growth.
Here’s a table of the 2026 tax brackets for different filing statuses:
| Tax Rate | Single Filers | Married Filing Jointly | Heads of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 | $0 – $17,700 | $0 – $12,400 |
| 12% | $12,401 – $50,400 | $24,801 – $100,800 | $17,701 – $67,450 | $12,401 – $50,400 |
| 22% | $50,401 – $105,700 | $100,801 – $211,400 | $67,451 – $105,700 | $50,401 – $105,700 |
| 24% | $105,701 – $201,775 | $211,401 – $403,550 | $105,701 – $201,750 | $105,701 – $201,775 |
| 32% | $201,776 – $256,225 | $403,551 – $512,450 | $201,751 – $256,200 | $201,776 – $256,225 |
| 35% | $256,226 – $640,600 | $512,451 – $768,700 | $256,201 – $640,600 | $256,226 – $384,350 |
| 37% | $640,601+ | $768,701+ | $640,601+ | $384,351+ |
Compared to 2025, these thresholds are about 2-3% higher, reflecting inflation. If your income stays the same, you might pay less in taxes or remain in a lower bracket.
Standard Deduction Increases for 2026
The standard deduction—a flat amount subtracted from your income before taxes are calculated—has been boosted for inflation and further enhanced by OBBBA provisions. This benefits the majority of taxpayers who don’t itemize.
- Single and Married Filing Separately: $16,100 (up from $15,750 in 2025)
- Married Filing Jointly and Qualifying Widow(er): $32,200 (up from $31,500)
- Heads of Household: $24,150 (up from $23,625)
OBBBA includes an extra 5% inflation bump for 2026, providing additional relief. Seniors (65+) and those who are blind get additional amounts: $2,000 more for singles/heads of household, or $1,600 per qualifying spouse on joint returns (doubled if also blind).
New and Expanded Deductions in 2026
OBBBA introduces several taxpayer-friendly deductions, many temporary through 2028, aimed at middle-income earners and specific groups.
New Senior Deduction
Taxpayers aged 65 or older can claim an extra $6,000 deduction ($12,000 for joint filers if both qualify), on top of the standard deduction. This phases out starting at modified adjusted gross income (MAGI) of $75,000 ($150,000 joint) and is fully eliminated at $175,000 ($250,000 joint).
Higher SALT Deduction Cap
The cap on state and local tax (SALT) deductions for itemizers jumps to $40,000 ($20,000 for married filing separately), up from $10,000. It increases 1% annually through 2029 and phases out for high earners (MAGI over $500,000).
Car Loan Interest Deduction
A new above-the-line deduction allows up to $10,000 in interest on loans for U.S.-assembled vehicles (under 14,000 lbs.). Phases out at MAGI over $100,000 ($200,000 joint).
Tips and Overtime Deductions
- Tips: Deduct up to $25,000 in qualified cash tips (e.g., from service jobs).
- Overtime: Deduct up to $12,500 ($25,000 joint) of overtime pay above regular rates.
Both phase out for higher incomes and are available regardless of itemizing.
Retirement Contribution Limits for 2026
Saving for retirement gets a boost with higher limits on contributions, encouraging long-term planning.
- 401(k), 403(b), 457 Plans: $24,500 base limit (up from $23,500), plus $8,000 catch-up for 50+ ($11,250 for ages 60-63).
- SIMPLE Plans: $17,000 base, $4,000 catch-up for 50+ ($5,250 for 60-63).
- IRAs (Traditional/Roth): $7,500 base, $1,100 catch-up for 50+.
OBBBA also expands Health Savings Accounts (HSAs) to include more plans and telehealth services.
Estate and Gift Tax Changes
The estate tax exclusion rises to $15 million (from $13.99 million in 2025), shielding more estates from the 40% tax. Annual gift exclusion remains $19,000 per recipient, with $194,000 for non-citizen spouses.
Other Notable 2026 Tax Updates
- Adoption Credit: Up to $17,670 (with $5,120 refundable).
- Earned Income Tax Credit (EITC): Max $8,231 for families with 3+ children.
- Alternative Minimum Tax (AMT): Exemptions at $90,100 single/$140,200 joint.
- Trump Accounts: New savings vehicle for children, with up to $5,000 annual contributions plus federal match.
- Clean Energy Credits: Phased out for vehicles after September 2025 and home improvements after December 2025.
Some changes, like a 1% excise tax on remittances, may affect specific groups.
How to Prepare for 2026 Tax Changes?
With these IRS tax changes for 2026, now is the time to review your withholding, maximize deductions, and boost retirement savings. Consult a tax professional to tailor these updates to your situation, especially if you’re in a high-income bracket or qualify for new deductions. Staying informed can lead to significant savings—don’t wait until filing season.
For the latest details, visit IRS.gov or trusted financial advisors. These changes reflect efforts to make the tax code more equitable and responsive to economic pressures.