IRS Tax Inflation Adjustments: Brackets, Deductions, and Limits

The IRS’s 2026 tax inflation adjustments raise nearly every threshold that touches your return, and this year the increases are unusually large because the One, Big, Beautiful Bill Act (signed July 4, 2025) restructured several provisions on top of the usual indexing.¹ Standard deductions are higher, the child tax credit is up, and the estate tax exemption jumped to $15 million per person. The full 2026 figures are published in Revenue Procedure 2025-32.²

2026 Federal Income Tax Brackets

The seven marginal rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) still apply, and each rate only touches the income that falls inside its band.¹

Single Filers

10%: income up 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%: over $640,600

Married Filing Jointly

10%: income up 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%: over $768,700

Head of Household

10%: income up to $17,700
12%: $17,701 to $67,450
22%: $67,451 to $105,700
24%: $105,701 to $201,775
32%: $201,776 to $256,200
35%: $256,201 to $640,600
37%: over $640,600

Married filing separately uses the single-filer thresholds in the lower brackets, but the 35% bracket tops out at $384,350, and the 37% rate begins above that.² The top single-filer threshold rose from $609,350 in 2024 to $640,600 in 2026.

Standard Deduction

Most filers claim the standard deduction rather than itemizing. For 2026:¹

Single or married filing separately: $16,100
Married filing jointly: $32,200
Head of household: $24,150

The single-filer amount was $14,600 in 2024, so 2026 is up $1,500 over two years thanks to indexing plus the structural bump from the One, Big, Beautiful Bill.

Filers aged 65 or older get an enhanced senior deduction of $6,000 per qualifying individual, or $12,000 for a married couple where both spouses are 65 or older. The provision runs from tax year 2025 through 2028.³ A married couple both over 65 can reach a combined standard deduction of $44,200.

Credits, the AMT, and Pass-Through Business Income

Child Tax Credit

The child tax credit rises to $2,200 per qualifying child for 2026, up from $2,000, and it is now indexed for inflation going forward rather than frozen. The refundable portion remains capped at $1,700.⁴

Earned Income Tax Credit

The maximum EITC for 2026:²

No qualifying children: $664
One child: $4,427
Two children: $7,316
Three or more children: $8,231

The credit phases out as income rises, so filers near a cutoff can gain or lose meaningfully on a small change in earnings or filing status.

Alternative Minimum Tax

The AMT exemption for 2026 is $90,100 for single filers and $140,200 for married couples filing jointly. Phase-outs begin at $500,000 and $1,000,000, respectively.¹

Qualified Business Income Deduction

Owners of sole proprietorships, partnerships, and S corporations can still deduct up to 20% of qualified business income under Section 199A. The One, Big, Beautiful Bill reset the phase-out ranges: they begin at $75,000 for single filers and $150,000 for joint filers, with a complete phase-out at $272,300 and $544,600.² Filers below the lower threshold can generally take the full deduction regardless of business type.

Long-Term Capital Gains

Preferential rates of 0%, 15%, or 20% still apply to gains on assets held longer than a year. For 2026:²

0% rate: taxable income up to $49,450 (single), $98,900 (married filing jointly), or $66,200 (head of household)
15% rate: income above those thresholds up to $545,500 (single), $613,700 (joint), or $579,600 (head of household)
20% rate: income above those upper limits

If your total taxable income after deductions falls below the 0% ceiling, you owe nothing on long-term gains. That matters in retirement years and other low-income years when selling appreciated positions or rebalancing.

Retirement, HSA, and Social Security Limits

Employees can defer up to $24,500 into a 401(k), 403(b), or 457 plan in 2026, up from $23,500. The age-50 catch-up is $8,000, and a separate catch-up of $11,250 applies to employees aged 60 through 63, allowing a total deferral of $35,750 for that group.⁵

The Traditional and Roth IRA limit rises to $7,500, with a $1,100 catch-up at age 50 for a total of $8,600.⁵ Roth contributions still phase out at higher incomes, and Traditional IRA deductibility still depends on whether you’re covered by a workplace plan.

HSA contributions for filers with a qualifying high-deductible health plan are capped at $4,400 for self-only coverage and $8,750 for family coverage in 2026. A $1,000 catch-up applies at age 55 for those not enrolled in Medicare.⁶

The Social Security wage base rises to $184,500. You and your employer each pay 6.2% up to that ceiling; the 1.45% Medicare tax still applies to all wages with no cap.⁷

Estate and Gift Tax

The annual gift tax exclusion rises to $19,000 per recipient. Gifts up to that amount don’t require a return or reduce your lifetime exemption, and a married couple can combine to give $38,000 per recipient.⁸

The lifetime estate and gift tax exemption is now $15,000,000 per person for 2026 under Section 2010(c)(3), or $30 million for a married couple.⁸ Under prior law, the exemption was scheduled to fall to roughly $7 million per person in 2026 when the Tax Cuts and Jobs Act provisions expired.

SALT Deduction Cap

The state and local tax deduction, capped at $10,000 since 2018, is now up to $40,000 for 2026 for filers with modified adjusted gross income under $500,000 ($250,000 for married filing separately). Above that income level, the cap gradually decreases. Both the higher cap and the income threshold adjust by 1% annually.⁴ Itemizers in high-tax states will see the largest benefit.

What to Check Before the Year Gets Away From You

Because 2026 layers structural changes onto the normal indexing, W-4 elections set in earlier years may be out of date. Higher standard deductions and shifted brackets can leave you overwithholding through the year. The IRS Tax Withholding Estimator takes a few minutes and will tell you whether to adjust. If you’re near retirement, the enhanced senior deduction and the raised estate exemption both open planning options that didn’t exist before the One, Big, Beautiful Bill.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
2
Internal Revenue Service. Rev. Proc. 2025-32 – 2026 Inflation-Adjusted Items
3
Internal Revenue Service. Check Your Eligibility for the New Enhanced Deduction for Seniors
4
Internal Revenue Service. One, Big, Beautiful Bill Provisions
5
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
6
Internal Revenue Service. Notice 2026-5
7
Social Security Administration. Contribution and Benefit Base
8
Internal Revenue Service. What’s New — Estate and Gift Tax