There are also higher deductions and bigger credits next year

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The IRS is raising standard deductions for 2026 up to $32,200 for joint filers and $16,100 for singles along with larger credits for families, adoptions, and employer-provided childcare.
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The top tax rate remains 37%, but income thresholds in all brackets are increasing slightly, meaning many taxpayers may owe a bit less.
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Bigger Earned Income and childcare credits, higher limits for FSAs and commuter benefits, and modest estate and AMT increases will offer additional tax relief in 2026.
The Internal Revenue Service (IRS) has announced the 2026 tax brackets and other key updates that will affect the returns Americans file in 2027.
The changes, outlined in Revenue Procedure 2025-32, include increases to standard deductions, tax credits, and income thresholds all shaped by the recently passed One, Big, Beautiful Bill (OBBB).
The standard deduction the amount most taxpayers can subtract from their income before paying federal taxes is going up again in 2026:
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$32,200 for married couples filing jointly
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$16,100 for single filers and married individuals filing separately
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$24,150 for heads of households
Thats a small boost over 2025s amounts ($31,500 for joint filers, $15,750 for single filers, and $23,625 for heads of households).
Tax brackets shift slightly
The top federal tax rate stays the same 37% but the income thresholds for each bracket are rising slightly to account for inflation.
For 2026, single taxpayers earning more than $640,600 and couples earning over $768,700 will still fall into the top bracket. The other brackets look like this:
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35% for incomes over $256,225 ($512,450 for couples)
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32% for incomes over $201,775 ($403,550 for couples)
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24% for incomes over $105,700 ($211,400 for couples)
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22% for incomes over $50,400 ($100,800 for couples)
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12% for incomes over $12,400 ($24,800 for couples)
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10% for incomes below those levels
Bigger breaks for families
Families and working parents will see a few notable boosts:
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Earned Income Tax Credit (EITC): The maximum credit for taxpayers with three or more qualifying children rises to $8,231, up from $8,046 in 2025.
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Adoption Credit: The maximum credit for qualified adoption expenses increases to $17,670, and up to $5,120 of that amount may be refundable.
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Employer-Provided Childcare Credit: The OBBB dramatically raises this benefit from $150,000 to $500,000, or $600,000 for small businesses that offer childcare support to employees.
More adjustments for everyday expenses
A handful of everyday tax-related items are also increasing for 2026:
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Commuter and Parking Benefits: The monthly limit rises to $340.
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Health Flexible Spending Accounts (FSA): Workers can contribute up to $3,400, and unused balances up to $680 can roll over.
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Medical Savings Accounts (MSA): Deductibles and out-of-pocket limits rise slightly for both single and family plans.
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Foreign Earned Income Exclusion: Expats can exclude up to $132,900 of foreign income, up from $130,000.
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Gift Tax Exclusion: The annual limit remains $19,000 per recipient, but gifts to non-U.S. citizen spouses increase to $194,000.
Whats not changing
Some parts of the tax code will remain frozen:
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Personal Exemptions: Still set at $0, a rule made permanent under the new law.
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Itemized Deductions: The old limits remain repealed, but high-income taxpayers in the top bracket will still face a cap on the tax benefit.
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Lifetime Learning Credit: Income phaseouts remain at $80,000$90,000 for single filers and $160,000$180,000 for couples.
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The estate tax exemption increases to $15 million, meaning most estates wont owe federal tax unless they exceed that amount.
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The Alternative Minimum Tax (AMT) exemption goes up to $90,100 for single filers and $140,200 for joint filers.
What it means
Most Americans will see small but steady relief in 2026, especially families with children or employers offering childcare support. While the top tax rate hasnt changed, the higher income thresholds and deductions mean many people could owe slightly less next year.
Posted: 2025-10-20 13:49:20