IRS Releases NEW 2026 Tax Brackets Here s How Much You Can Save

The IRS just released their inflation adjusted tax brackets for 2026, which is now going to save millions of taxpayers more money in taxes. You are now going to be able to report more of your income at lower tax rates. You are also going to have a higher standard deduction, which means less of that income actually being taxed when you go and file your tax return. For investors, you will now be able to report more of your capital gains at lower tax rates as well. And for my savers, you are also going to be able to put more of your income towards things like your HSA, different retirement accounts, and other tax deferred accounts. So as someone who has already read all of the revenue procedures pertaining to these changes for you, and as a licensed CPA that tax plans every day at MyCPACoach.com, I want to provide you with a very simple and easy understanding of how these changes are going to affect you. So let's jump right in. Okay, let's start with the new individual tax brackets for 2026. And then we will talk about other key changes that you need to know. So first of all, many people actually misunderstand individual tax brackets. For example, they think that if they are in the 22% tax bracket, that that means all of their income would be taxed at 22%, but that is not true. So let's carefully walk through this. The 2026 tax rates range from 10 to 37%, but I want you to think about these brackets as if they were buckets. And the first part of your income that goes into the first bucket would be taxed at the lowest tax rate. So for single taxpayers in 2026, the first $12,400 of your income will be taxed at just 10%. Then the income you earn above this range will be taxed at just 12% up to about $50,000. And the income above that range will be taxed at 22% up to about $105,000. So someone who was earning $100,000 per year as a single taxpayer would pay different tax rates on different portions of their income. And that's what you have to understand. And your tax rates as an individual will continue to rise up to 24%, 32%, 35%, or even up to 37% based on your income. But what I want you to pay attention to here are the big jumps that we're seeing in the different tax rates. The first big jump is from 12% to 22%. That's a 10% increase in your tax rate, which means you would pay an extra $1,000 on every $10,000 in income. You report above that range on your tax return. And the next big jump that we see here is usually when people start calling me to help them with their taxes. And that's when your tax rate goes from 24% to 32%, which happens when you're earning over $200,000 as a single taxpayer representing an 8% increase in your overall tax rate. That means that you will be paying an additional $800 on every $10,000 in income you report above this range. And from here, the tax rates continue to rise based on your income. So you will pay a 35% tax on income above $256,000 and 37% on incomes above $640,000. Now, believe it or not, these tax rates are actually a lot better than the 2025 tax rates, which I'll talk about in a moment here. But first let's go through the 2026 rates for married taxpayers as well. Now, if you don't know, as a married taxpayer, you are able to basically get twice as much income into most of these same tax brackets, which surprises many of my clients when I tell them this. And funny enough, I even have clients who decide to get married after realizing this. So whether you are married or not, this is still important information to know. So let's go ahead and walk through this as well. In 2026, married taxpayers will only pay a 10% tax on up to about $25,000 of their income, twice as much as the $12,400 amount that we saw for single taxpayers. And then they will pay just a 12% tax on their income up to about $100,000. Now just think about this for a moment here. Married taxpayers can earn a six figure income and pay a maximum federal tax rate of just 12%. That's a pretty good deal and will be big for millions of taxpayers. And we haven't even talked about the standard deduction increase or the new capital gains rates yet, which we'll talk about in a moment here. But as a married taxpayer, once you get above about $100,000 in income, your marginal tax rate will jump to 22%. And this is when taxes start to become a nuance for married taxpayers. And even more so once you're earning over $211,000 in income, it jumps to 24% then. And then there's another big jump to 32% once you're earning over about $403,000 as a married taxpayer. And that is when taxes start to become a big problem for these taxpayers. And from there, it goes to 35% once you are earning more than $512,000 and up to 37% once you are earning over $768,000 per year as a married taxpayer. By the way, if you want a print version of all of these tax breaks, just comment brackets below and I will try to send them to you. Now, some of you are probably wondering, how exactly are these new tax brackets different from the 2025 tax brackets that we had? Well, I ran the numbers and you can fit almost 3% more of your income into each of these tax brackets. Thanks to these new inflation adjustments made by the IRS. For example, in 2025, the maximum income limit for the 12% tax bracket was about $97,000 for married taxpayers. In 2026, that same tax bracket is up to about $101,000. So that's about $4,000 more in income that you can squeeze into that tax bracket. And there's also a 10% difference in that tax bracket, meaning that someone with the same amount of income would save about $400 in taxes on just this portion of their income alone in 2026, as opposed to 2025. And this is just a very small example, but please keep in mind that these small increases in income across every tax bracket could easily save someone a few extra thousand dollars in taxes. Once all of this is accounted for, which is a good thing for most taxpayers. Plus, once we account for the changes in other tax rates, like the new standard deduction that we have or the new capital gains rate, for example, taxpayers would save even more money in taxes. So let's go ahead and switch gears and talk about the other key changes that will ultimately affect your bottom line. Starting with the new standard deduction amount since 90% of taxpayers take this deduction. So in 2025, the standard deduction was about $15,750 for single taxpayers, a little over $23,000 for head of household filers and $31,500 for married taxpayers. In 2026, the standard deduction was increased to $16,100 for single taxpayers, a little over $24,000 for head of households and $32,200 for married taxpayers, which represents about a 2.5% increase from 2025. Plus, keep in mind that these rates were originally set to decrease by nearly half before the passing of the big beautiful bill, which kept these deduction amounts relatively high. And now we're getting a nice inflation bump to those rates as well. And to get an idea of how much more this saves you in taxes, just take your max marginal tax rate and multiply it by this deduction. So for example, someone who is married and is also in the 37% tax bracket would save nearly $12,000 in taxes from the standard deduction alone, or an extra $300 in taxes when compared to the 2025 standard deduction. Now for those people who take the itemized deduction, this would also mean that your itemized deductions would have to be even higher now for them to be more beneficial for you when compared to the standard deduction. But that may be totally possible now, because the big beautiful bill also increased the amount of state and local taxes that you can deduct on your federal tax return. Before the bill passed, you could only deduct up to $10,000 of those expenses as an itemized deduction. But now you can actually write off up to $40,000, which may be extremely beneficial for someone who already has other itemized expenses that they can add to this like medical and dental expenses, charitable donations, or their mortgage interest. For example, usually people only take the itemized deduction when it exceeds their standard deduction. And if you want more information on that, just comment itemized below and I'll consider making a detailed video about that. Now let's talk about one other big change in tax rates here that will affect almost every person watching this, that earns some type of dividend income or capital gains from selling investments or other types of property. And that is the new capital gains tax rates for 2026. Now, if you don't know a capital gain occurs when you sell an asset for more than what you purchased it for. For example, if you bought a stock for $10 and later sold it for 15, you would have a $5 capital gain. And it is very important for everyone to know how their capital gains will be taxed starting in 2026. So let's break this down. First and foremost, if you have a short-term capital gain, meaning that you held that asset for less than one year before you sold it, then that gain will be taxed at the same ordinary income tax rates that we just discussed ranging from zero to 37%. So you would benefit from being able to report about 3% more income at lower tax rates, but you would not benefit from the more favorable rates for capital gains, which exists for long-term capital gains. These are gains on assets you sold that you held for more than one year, which are taxed at rates as low as zero to 20%. With that said, now let's address the new adjustments in terms of how those gains will be taxed in 2026. So for taxpayers filing single, you will pay a 0% tax on long-term capital gains if your taxable income is less than $50,000, a 15% tax if your taxable income is below $307,000, and a 20% tax if your taxable income is above that amount. And for married taxpayers, you will pay a 0% tax on your long-term gains when your income is less than $99,000. Just hold on for a second here. I just want to mention that this is huge, especially for retirees and people with less income, because if your taxable income after deductions is less than about $100,000, your long-term capital gains would effectively be tax-free. So someone who has saved and invested diligently over many years may be able to trigger long-term capital gains at a 0% tax rate. And remember, taxable income is income you report after taking all of your deductions. So even if you earn above this range, you may still qualify if you're taking advantage of deductions like the standard deduction, the itemized deduction, or the hundreds of other business or real estate deductions that you can use to reduce your taxable income to or below this range. Anyway, I just wanted to point out how powerful that 0% tax rate is and how it can present a big tax planning opportunity for individuals who may benefit. But moving on from that, once your income is above $99,000 as a married taxpayer, your long-term capital gains will be taxed at 15% and then taxed at 20% once your taxable income exceeds $614,000. Now, outside of this, the IRS will also be increasing deductions and limits around IRAs, 401ks, HSAs, and other tax advantage accounts, which can also save you big money in taxes. And if you want me to send you that video, just comment 401k below and I will try my best to send it to you. Otherwise, if you need help implementing a tax plan that is guaranteed to reduce your taxes, just apply to work with my team today at MyCPACoach.com.