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2026 Tax Brackets: What Changed—and What You Can Do About It

  • HFF Staff Writer
  • Oct 10
  • 3 min read

Laptop displaying "Tax Projections" graphs on a wooden desk with a coffee cup, paper, and pen. Lamp and bookshelves in the background.

What changed for 2026?


For 2026 returns (filed in early 2027), the IRS widened each income-tax bracket for inflation and updated more than 60 thresholds, credits, and deductions. The existing rate structure—10%, 12%, 22%, 24%, 32%, 35%, 37%—remains in place under the 2025 tax law, which extended the TCJA-era brackets rather than letting them expire after 2025 (IRS, 2025; Wall Street Journal, 2025). Thresholds rose modestly overall, with larger bumps in the lower brackets and smaller ones at the top (MarketWatch, 2025; KPMG, 2025).


The top 37% bracket now starts at about $640,600 for single filers and $768,700 for married filing jointly (IRS, 2025; Wall Street Journal, 2025).


What happened to the standard deduction?


The standard deduction rises to roughly $16,100 (single) and $32,200 (married filing jointly) for 2026. Head-of-household increases as well (IRS, 2025; Wall Street Journal, 2025). Larger deductions plus wider brackets can reduce your effective tax rate if your income growth lags the new thresholds (MarketWatch, 2025).


How about capital gains and investment income?


Long-term capital-gains and qualified-dividend brackets are also indexed. For 2026, the 0% gains bracket is projected to cover incomes up to about $49,450 (single) and $98,900 (married filing jointly); above that, the 15% and 20% brackets apply at higher thresholds (Morningstar/MarketWatch, 2025; IRS, 2025). This matters if you’re harvesting gains, coordinating charitable gifts of appreciated securities, or managing Medicare IRMAA exposures.


What changed for estates and gifts?


The federal estate-tax exclusion increases to about $15 million per person in 2026, reflecting both inflation updates and the new law’s framework (IRS, 2025; Axios, 2025). Annual gift-tax exclusion amounts continue to be indexed. For families with sizable balance sheets, re-running your estate plan—credit shelter, portability, and lifetime gifting strategies—may uncover new opportunities.


Why do headlines say “more relief”?


Two forces are at work: (1) inflation indexing pushes brackets and deductions higher, which helps counter “bracket creep,” and (2) the 2025 tax law maintained the current rate schedule and adjusted several related items. Together, these changes mean many households will owe less than they would have if pre-2017 rules had returned in 2026 (IRS, 2025; Bipartisan Policy Center, 2025; Tax Foundation, 2025).


What planning moves should I consider before and during 2026?


  • Dial-in your withholding and estimated taxes. A modest threshold shift can change your safe-harbor targets and cash-flow needs (IRS, 2025).

  • Time income and deductions. If 2026 puts you squarely in a lower marginal bracket, deferring discretionary income (bonuses, Roth conversions, capital gains) could help; conversely, bunching deductions into a single year can push you over the standard deduction and into itemizing (Wall Street Journal, 2025; KPMG, 2025).

  • Coordinate Roth conversions. Wider brackets create room to convert within a target rate without tripping a higher bracket or IRMAA tier (KPMG, 2025).

  • Harvest gains (or losses) thoughtfully. Use the 0% or 15% capital-gains thresholds when possible, while watching for knock-on effects to credits and surtaxes (Morningstar/MarketWatch, 2025).

  • Review estate documents. Higher exclusions can shift optimal strategies for gifting, trusts, and beneficiary designations (IRS, 2025; Axios, 2025).

  • Mind phase-outs and cliffs. Several credits and deductions still phase out at specific AGI levels; the indexing helps, but coordination remains critical (IRS, 2025).


A quick example


If your household’s taxable income stays roughly flat year over year, you may find more of it taxed at lower rates in 2026 because the bracket thresholds moved up. The savings can be subtle—a few hundred to a few thousand dollars—yet meaningful when compounded across retirement contributions, charitable planning, and investment rebalancing (Wall Street Journal, 2025; IRS, 2025).


Bottom line


Indexing plus the 2025 law provide a window to optimize—not just for April, but for the next decade of your plan. The right moves depend on your filing status, income mix, and goals. If you’d like, our fiduciary advisors can run your 2025–2026 projections and build a Custom Financial Blueprint tailored to your situation. No guarantees, just disciplined planning aligned to your long-term objectives.



Resources

  • Internal Revenue Service. Revenue Procedure 2025-32: Inflation Adjustments for 2026. PDF. IRS

  • Wall Street Journal. “The 2026 Tax Brackets Are Here. See Where You Land.” Wall Street Journal

  • MarketWatch. “The IRS Just Released Its 2026 Tax Brackets…” MarketWatch

  • KPMG. “Rev. Proc. 2025-32: Inflation adjustments for 2026, individual taxpayers.” KPMG

  • Morningstar/MarketWatch. “Here are the 2026 capital-gains-tax rates…” Morningstar

  • Bipartisan Policy Center. “What’s in the 2025 Republican Tax Law.” Bipartisan Policy Center

  • Tax Foundation. “2026 Tax Calculator: OBBBA.” Tax Foundation

  • Axios. “IRS releases new tax brackets, increases tax deductions.” Axios

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