2026 Tax Updates: New Standard Deduction Amounts, Tax Brackets, & More

In the 2026 tax season (filing for tax year 2025), taxpayers will encounter new inflation adjustments on over 60 tax provisions, including tax rates, standard deductions, and other changes. Knowing these changes can help you file your federal income tax returns.

The standard tax deduction is a portion of your taxable income that is not subject to tax. Standard deduction amounts reduce your taxable income.

For the 2026 tax year, the standard deductions are increased as follows:

Standard Deduction by Filing Status

• Single Filers / Married Filing Separately: $16,100
• Heads of Household: $24,150
• Married Filing Jointly: $32,200

Usually, you use itemized deductions to lower your taxable income. This can help you move to a lower tax bracket. Itemized deductions can take effort and time to calculate, plus tracking the receipts for any possible expenses.

What if most Americans qualify for the same itemized deductions that also require the least amount of effort to verify? That’s where the standard deduction comes in.

In simple terms, the standard deduction can reduce your taxable income by a set amount which the Internal Revenue Service establishes for each filing status. Then when you file your federal income tax returns, you can simply lower your taxable income and get the benefit on your income taxes without a lot of extra work. Depending on your year, you could save more money with itemized deductions to reduce your taxable income and stay at lower marginal tax rates.

Opting for the standard deduction is popular since it simplifies tax prep, eliminating the need to itemize deductions.

Effective 2025-2028, individuals age 65 and older may claim a bonus standard deduction ($6,000) on top of the standard deduction. This applies per eligible individual (or $12,000 for a married couple if both spouses qualify). The additional deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).

In 2026, the federal income tax brackets will also see changes to account for inflation. The top marginal tax rate for single taxpayers remains at 37%. This rate applies to those earning over $640,600.

The federal tax structure in 2026 consists of seven different marginal income tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Here is a quick rundown:

Marginal Tax Rates by Taxable Income

• 10%: ≤$12,400 (≤$24,800 joint)
• 12%: ≥$12,400 (≥$24,800 joint)
• 22%: $50,400 ($100,800 joint)
• 24%: $105,700 ($211,400 joint)
• 32%: $201,775 ($403,550 joint)
• 35%: $256,225 ($512,450 joint)
• 37%: $640,600 ($768,700 joint)

The IRS has announced a modest adjustment for federal tax brackets, aimed at preventing “bracket creep”, a situation where inflation nudges taxpayers into higher tax brackets without an actual increase in real income.

The structure of tax brackets ensures that as income levels rise, so do the tax rates applied.

The system’s tiered approach attempts to ensure that no taxpayer pays a single rate on their entire income, but rather on portions of their income that fall into each bracket. Then the average of all those rates add up to a taxpayer’s effective tax rate.

In 2026, the rules for capital gains taxes have specific rates based on income. The long-term capital gains tax rates continue to be 0%, 15%, and 20%, although the associated income thresholds have changed, and there are 25% and 28% tax rates on selling section 1250 real property and collectibles, respectively.

Capital Gains Tax Rates by Filing Status

The IRS adjusts these thresholds annually for inflation protection, which affects lower- and middle-income groups. These adjustments attempt to maintain fair tax rates as the cost of living changes.

The Earned Income Tax Credit (EITC) is a benefit for working individuals with low to moderate income. This tax credit can help lessen the financial burden for families by boosting their earnings. The EITC amount is $8,231 for qualifying taxpayers who have three or more qualifying children (up from $8,046 in 2025).

The personal exemption, once a key component in tax calculations, remains at $0 for 2026. This change stems from the Tax Cuts and Jobs Act (TCJA) and was made permanent by the one Big Beautiful Bill.

Removing the personal exemption reduced tax benefits for some families, especially those with multiple dependents. However, the increase in the standard deduction and child tax credit offset this loss for most.

From 2025-2028, employees and self-employed workers may deduct qualified tips (including voluntary cash, charged tips, or shared tips) from their income taxes, as long as they are reported. The maximum annual deduction is $25,000, and this deduction cannot exceed an individual’s net income.

For those who work overtime, they may deduct the portion of qualified overtime pay as reported on Form W-2. The maximum annual deduction is $12,500 ($25,000 joint).

Several clean vehicle and home energy credits have expired as a result of the One Big Beautiful Bill. This includes the New Clean Vehicle Credit, Used Clean Vehicle Credit, Qualified Commercial Clean Vehicle Credit, Energy Efficient Home Improvement Credit, and Residential Clean Energy Credit.

Along with all the adjustments for tax year 2026, what you really want to know is how much your tax refund might be. Ask a tax professional from Community Tax to help, regardless of your situation. Our expert CPAs, accountants, tax advisors, and Enrolled Agents can help you prepare and file your 2026 taxes, and secure a refund where applicable. If you need help with a tax liability from the previous year, our staff has the expertise to navigate a payment plan with the IRS to help you on your path to financial freedom.

• IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill – IRS.gov
• One, Big, Beautiful Bill provisions – IRS.gov
• IRS Updates Capital Gains Tax Thresholds for 2026: Here’s What’s New – Kelley R. Taylor (Kiplinger)