Tax Bracket 2026 Changes: You'll Need $14,000 More to Hit the Top Rate

The IRS has released tax bracket 2026 inflation adjustments, revealing that single filers will need to earn $640,600 to reach the top 37% marginal rate, up from $626,350 in 2025.

Married couples filing jointly face the highest rate at $768,700, compared to $751,600 in 2025. These changes stem from annual inflation adjustments and provisions in the One Big Beautiful Bill Act (OBBB), which made most Tax Cuts and Jobs Act provisions permanent.

The standard deduction rises to $16,100 for single filers and $32,200 for joint filers. Understanding these tax bracket 2026 changes is crucial for tax planning, as only income above specific thresholds is taxed at higher rates due to America’s progressive tax system.

Understanding the Progressive Tax System

Paying income taxes is a reality for anyone earning money in the U.S., and those with higher earnings often face substantial IRS payments. This is due to the progressive nature of the American tax system. Different portions of your income are taxed at varying rates, depending on which tax bracket 2026 threshold your earnings fall into. As your income increases, the extra amount is subject to higher tax rates.

The IRS adjusts tax brackets annually to keep up with inflation and rising wages. With these new brackets, you’ll need to earn more before reaching the highest tax rate. For 2026, the income required to move into a higher tax bracket will increase—meaning you’ll need to earn more to reach the top bracket.

For 2025, single filers enter the highest bracket at $626,350, and married couples filing jointly at $751,600. In 2026, however, the 37% top marginal rate won’t apply until singles earn $640,600 or joint filers make $768,700. This $14,250 increase for single filers and $17,100 increase for joint filers represents approximately a 2.3% inflation adjustment.

Complete Tax Bracket 2026 Structure

The federal income tax has seven tax rates in 2026: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The OBBB made permanent the TCJA ordinary income tax structure and provided an additional 4% inflation adjustment for the bottom two brackets (10% and 12%), while higher brackets received a 2.3% increase.

Tax Bracket 2026 Income Thresholds for Single Filers:

10%: $0 to $12,400

12%: $12,401 to $50,400

22%: $50,401 to $105,700

24%: $105,701 to $201,775

32%: $201,776 to $256,225

35%: $256,226 to $640,600

37%: $640,601 or more

Tax Bracket 2026 Income Thresholds for Married Filing Jointly:

10%: $0 to $24,800

12%: $24,801 to $100,800

22%: $100,801 to $211,400

24%: $211,401 to $403,550

32%: $403,551 to $512,450

35%: $512,451 to $768,700

37%: $768,701 or more

Only Marginal Income Is Taxed at the Highest Rate

Although a 37% tax rate sounds steep, it’s crucial to understand that this rate applies only to the income above the threshold for that bracket. For instance, if you’re a single filer making $700,000 in 2026, you won’t pay 37% on the entire amount—just on the portion above $640,600.

With the brackets shifting upward, those whose earnings remain unchanged in 2026 will see lower federal tax bills. The highest earners will benefit most, as more of their income will be taxed at the lower rates of 10%, 12%, 22%, 24%, 32%, and 35% compared to previous years. This phenomenon, where unchanged nominal income results in lower effective tax rates due to bracket adjustments, helps prevent “bracket creep”—when inflation pushes taxpayers into higher brackets without real income gains.

Standard Deduction Increases for 2026

The standard deduction will also rise for the 2026 tax year. Single filers can deduct $16,100, up from $15,750, while married couples filing jointly can deduct $32,200, up from $31,500. Heads of household can claim $24,150, up from $23,625. The OBBB previously boosted the 2025 standard deduction by $750 for single filers and $1,500 for joint filers on top of the 2026 inflation adjustment.

However, many individuals with higher incomes may choose to itemize deductions instead, claiming specific expenses such as charitable donations, mortgage interest, and state and local taxes. Itemizing is only worthwhile if your total deductions exceed the standard deduction. Higher earners are more likely to benefit from itemizing, as they may own valuable property or pay significant state taxes.

Seniors over age 65 may claim an additional standard deduction of $2,050 for single filers and $1,650 for joint filers. Additionally, taxpayers aged 65 and older may claim a new $6,000 deduction per qualifying taxpayer under the OBBB, phasing out at a 6% rate for those earning over $75,000 (single) and $150,000 (joint).

Alternative Minimum Tax Adjustments

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding income tax through excessive deductions. For tax bracket 2026, the AMT exemption amount is $90,100 for singles and $140,200 for married couples filing jointly. The exemption begins to phase out at $500,000 for single filers and $1,000,000 for joint filers.

The OBBB’s changes to the AMT return the phaseout thresholds to 2018 levels and accelerate the phaseout rate from 25% to 50%. In 2025, the exemption phaseout thresholds began at $625,350 for single filers and $1,252,700 for married taxpayers filing jointly, making the 2026 changes a significant shift for some taxpayers.

Other Notable Adjustments for 2026

The Earned Income Tax Credit (EITC) maximum amount for 2026 is $8,231 for qualifying taxpayers with three or more children, up from $8,046 for 2025. The maximum credit is $664 for filers with no children, $4,427 for one child, and $7,316 for two children.

The Child Tax Credit (CTC) maximum in 2026 is $2,200 per qualifying child, up from the previous $2,000, with the refundable portion remaining at $1,700. The OBBB made the expanded CTC permanent and introduced inflation adjustments moving forward.

Long-term capital gains brackets also adjusted for inflation. The 15% rate begins at $49,450 for single filers and $98,900 for joint filers, while the 20% rate applies to incomes exceeding $545,500 for singles and $613,700 for joint filers.

The Qualified Business Income Deduction (Section 199A) remains at 20% for pass-through businesses, with deduction limits beginning to phase in at $201,775 for singles and $403,500 for joint filers. The OBBB extended the phase-in range from $50,000 to $75,000 for single filers and from $100,000 to $150,000 for joint filers.

Planning Implications

These tax bracket 2026 adjustments affect tax returns filed in early 2027 covering 2026 income. Taxpayers should adjust withholding and estimated payments accordingly to avoid surprises. The shift toward higher thresholds generally benefits all income levels, but strategic planning around itemization, retirement contributions, and business income deductions remains crucial.

The annual exclusion for gifts remains at $19,000 for 2026, while the estate tax exemption increases to $15 million per person. Understanding these changes allows for more effective wealth transfer planning.