The Internal Revenue Service has released its annual inflation adjustments for tax year 2026, and the changes could put more money in your pocket. With higher income thresholds across all seven tax brackets and an increased standard deduction, many taxpayers will see reduced tax burdens—even without any change in their actual income.

These adjustments arrive alongside significant changes from the One Big Beautiful Bill Act (OBBBA), passed in July 2025, which made permanent most of the individual tax provisions from the 2017 Tax Cuts and Jobs Act that had been scheduled to expire. Together, these changes represent meaningful savings for millions of American taxpayers.

The New Standard Deduction

For tax year 2026, the standard deduction increases to:

  • Married couples filing jointly: $32,200 (up $700 from 2025)
  • Single taxpayers: $16,100 (up $350 from 2025)
  • Heads of household: $24,150 (up $550 from 2025)

For the roughly 90% of taxpayers who take the standard deduction rather than itemizing, this automatic increase reduces taxable income dollar-for-dollar. A married couple in the 22% bracket, for example, would save approximately $154 in taxes just from the standard deduction increase.

The 2026 Tax Brackets

The federal income tax maintains seven rates in 2026: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. What changes are the income thresholds at which each rate applies:

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

These higher thresholds mean that more of your income is taxed at lower rates before "spilling over" into higher brackets. The effect is subtle but meaningful, particularly for taxpayers whose incomes are near bracket boundaries.

Special Provision for Seniors

One of the most notable changes from the One Big Beautiful Bill Act is a new $6,000 federal tax deduction for Americans 65 and older. This temporary provision, running through the 2028 tax year, is available to both itemizers and non-itemizers.

Married couples where both spouses qualify can claim up to $12,000 total. For seniors paying taxes on Social Security income, this deduction provides welcome relief and could meaningfully reduce tax liability.

Retirement Contribution Limits Rise

Savers will appreciate the higher contribution limits for retirement accounts in 2026:

  • 401(k), 403(b), and TSP: $24,500 (up from $23,500 in 2025)
  • IRA: $7,500 (up from $7,000 in 2025)
  • Standard catch-up contributions (age 50+): $8,000 for workplace plans
  • Super catch-up (ages 60-63): $11,250 for workplace plans

The "super catch-up" provision, introduced by SECURE 2.0, allows workers in their early 60s to turbocharge retirement savings during their peak earning years. A 62-year-old contributing the maximum to their 401(k) could shelter $35,750 from taxes in 2026.

Other Notable Changes

Estate Tax Exclusion

The estate tax exclusion increases to $15 million in 2026, up from $13.99 million in 2025. This means individuals can pass on up to $15 million (or $30 million for married couples using portability) without incurring federal estate taxes.

Earned Income Tax Credit

The maximum EITC increases to $8,231 for families with three or more children, up from $8,046 in 2025. This refundable credit remains one of the most valuable tax benefits for low-to-moderate income working families.

Health FSA Limits

For tax years beginning in 2026, the voluntary employee salary reduction for contributions to health flexible spending arrangements increases to $3,400, up $100 from the prior year. The maximum carryover amount rises to $680 for cafeteria plans that permit unused balance carryovers.

Qualified Charitable Distributions

The QCD limit for 2026 is $111,000, allowing IRA owners age 70½ and older to transfer up to this amount directly to qualified charities, satisfying RMD requirements while excluding the distribution from taxable income.

How to Maximize These Changes

Tax-savvy individuals can take several steps to benefit from these updates:

  • Review withholding: With higher brackets, you may be overwithholding—consider adjusting your W-4
  • Max out retirement contributions: Higher limits mean more tax-deferred savings opportunities
  • Plan for senior deduction: If you're approaching 65, factor the new deduction into retirement income planning
  • Consider Roth conversions: Higher brackets may make conversions more attractive for those currently in lower brackets
  • Update estate plans: The higher exclusion may affect estate planning strategies

The Bottom Line

While these inflation adjustments won't dramatically transform your financial picture, they do provide meaningful relief—particularly when compounded over time. A family that saves $500 annually from bracket creep adjustments will have accumulated $5,000 over a decade, not counting investment growth.

Combined with the permanence provided by the One Big Beautiful Bill Act, taxpayers now have more certainty about the rules governing their financial planning. That stability, perhaps as much as the specific numbers, may be the most valuable change of all.