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IRS Releases 2026 Inflation Adjustments for Tax Brackets and Key Deductions

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Ken Morris

Owner of Morris and Associates. He represents clients before the tax authorities as an enrolled agent and provides tax preparation, bookkeeping, payroll, tax representation, and incorporation services to Gwinnett County, Georgia and all of Metro Atlanta.

The Internal Revenue Service has announced the annual inflation adjustments for tax year 2026, affecting more than 60 tax provisions, including tax brackets, deductions, credits, and benefit limits. The updates were released in Revenue Procedure 2025-32 and reflect changes enacted under the One Big Beautiful Bill (OBBB).

These adjustments generally apply to 2026 tax returns filed in 2027.

Tax Brackets in 2026

Standard Deduction Increases for 2026

Under the updated thresholds, the standard deduction will rise across all filing statuses for tax year 2026:

  • Married filing jointly / surviving spouses: $32,200
  • Single filers / married filing separately: $16,100
  • Heads of household: $24,150

For comparison, OBBB also increased the standard deduction for tax year 2025 to:

  • $31,500 for married filing jointly
  • $15,750 for single filers
  • $23,625 for heads of household

2026 Federal Income Tax Brackets

The top marginal tax rate of 37% remains unchanged for tax year 2026 and applies to:

  • Single filers with income over $640,600
  • Married couples filing jointly with income over $768,700

Other marginal rates for 2026 include:

  • 35% on income over $256,225 ($512,450 joint)
  • 32% on income over $201,775 ($403,550 joint)
  • 24% on income over $105,700 ($211,400 joint)
  • 22% on income over $50,400 ($100,800 joint)
  • 12% on income over $12,400 ($24,800 joint)

The 10% bracket applies to income at or below $12,400 for single filers and $24,800 for joint filers.

Alternative Minimum Tax (AMT)

For tax year 2026:

  • Personal exemptions: Remain at zero, a change made permanent by OBBB.
  • Itemized deduction limitation: Permanently repealed, though high-income taxpayers remain subject to a benefit cap at the 37% bracket.
  • Lifetime Learning Credit: Income phase-out thresholds remain unchanged at $80,000–$90,000 ($160,000–$180,000 joint).

What Taxpayers Should Know

The IRS’s annual inflation adjustments are designed to prevent “bracket creep” and reflect rising costs. Taxpayers should review these changes when planning for 2026 income, deductions, and credits, particularly those related to standard deductions, employer benefits, and refundable credits.

  • Family coverage:
    • Deductible range: $5,850 to $8,750
    • Out-of-pocket limit: $10,700
    • Foreign Earned Income Exclusion
    • Increases to $132,900 for 2026.
    Gift Tax Exclusions
    • Annual gift exclusion: Remains at $19,000
    • Gifts to non-citizen spouses: Increased to $194,000

    Provisions Not Adjusted for Inflation

    Some tax provisions remain unchanged due to statutory limitations:

    • Personal exemptions: Remain at zero, a change made permanent by OBBB.
    • Itemized deduction limitation: Permanently repealed, though high-income taxpayers remain subject to a benefit cap at the 37% bracket.
    • Lifetime Learning Credit: Income phase-out thresholds remain unchanged at $80,000–$90,000 ($160,000–$180,000 joint).

    What Taxpayers Should Know

    The IRS’s annual inflation adjustments are designed to prevent “bracket creep” and reflect rising costs. Taxpayers should review these changes when planning for 2026 income, deductions, and credits, particularly those related to standard deductions, employer benefits, and refundable credits.

  • Family coverage:
    • Deductible range: $5,850 to $8,750
    • Out-of-pocket limit: $10,700
    • Foreign Earned Income Exclusion
    Gift Tax Exclusions

    Provisions Not Adjusted for Inflation

    Some tax provisions remain unchanged due to statutory limitations:

    What Taxpayers Should Know

    The IRS’s annual inflation adjustments are designed to prevent “bracket creep” and reflect rising costs. Taxpayers should review these changes when planning for 2026 income, deductions, and credits, particularly those related to standard deductions, employer benefits, and refundable credits.

    Foreign Earned Income Exclusion
    Gift Tax Exclusions

    Provisions Not Adjusted for Inflation

    Some tax provisions remain unchanged due to statutory limitations:

    What Taxpayers Should Know

    The IRS’s annual inflation adjustments are designed to prevent “bracket creep” and reflect rising costs. Taxpayers should review these changes when planning for 2026 income, deductions, and credits, particularly those related to standard deductions, employer benefits, and refundable credits.

    Other Inflation-Adjusted Provisions

    Earned Income Tax Credit (EITC)
    Transportation and Health Benefits
    Medical Savings Accounts (MSAs)

    For tax year 2026:

    Foreign Earned Income Exclusion
    Gift Tax Exclusions

    Provisions Not Adjusted for Inflation

    Some tax provisions remain unchanged due to statutory limitations:

    What Taxpayers Should Know

    The IRS’s annual inflation adjustments are designed to prevent “bracket creep” and reflect rising costs. Taxpayers should review these changes when planning for 2026 income, deductions, and credits, particularly those related to standard deductions, employer benefits, and refundable credits.

    Estate, Adoption, and Employer Credits

    Several credits and exclusions were also adjusted:

    Other Inflation-Adjusted Provisions

    Earned Income Tax Credit (EITC)
    Transportation and Health Benefits
    Medical Savings Accounts (MSAs)

    For tax year 2026:

    Foreign Earned Income Exclusion
    Gift Tax Exclusions

    Provisions Not Adjusted for Inflation

    Some tax provisions remain unchanged due to statutory limitations:

    What Taxpayers Should Know

    The IRS’s annual inflation adjustments are designed to prevent “bracket creep” and reflect rising costs. Taxpayers should review these changes when planning for 2026 income, deductions, and credits, particularly those related to standard deductions, employer benefits, and refundable credits.

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