IRS releases 2026 tax brackets with smaller inflation adjustment
The IRS released federal income tax brackets for tax year 2026 in October without much fanfare.
The brackets reflect a modest inflation adjustment, smaller than the prior two years.
This matters because bracket indexing limits tax increases caused by inflation rather than real income growth.
For many taxpayers, the relief will be limited.
The Law in Play
Federal income tax brackets are indexed annually under §1(f) using the Consumer Price Index.
The goal is to prevent bracket creep when wages rise only because of inflation.
The core question each year is how much CPI moved and how that flows into taxable thresholds.
Lower inflation means smaller bracket shifts, even if household costs still feel elevated.
Timeline
October 2025: The IRS released 2026 inflation-adjusted tax brackets.
October 2025: The IRS also updated standard deductions and select credits.
Present: The brackets apply to income earned in calendar year 2026 and filed in 2027.
2026 brackets for single filers
10%: $0 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%: $640,601 and above
The top bracket threshold increased about 2.3%.
The bottom bracket threshold increased about 3.9%.
2026 brackets for married filing jointly
10%: $0 to $24,800
12%: $24,801 to $100,800
22%: $100,801 to $211,100
24%: $211,101 to $403,550
32%: $403,551 to $512,450
35%: $512,451 to $768,700
37%: $768,701 and above
The pattern mirrors single filers.
Lower brackets moved more than higher brackets.
Other indexed changes
The IRS also increased standard deductions for 2026:
$16,100 for single filers and married filing separately
$24,150 for heads of household
$32,200 for married filing jointly
The Earned Income Tax Credit increased to $8,231 for families with three or more qualifying children.
These changes follow the same CPI-based indexing rules.
Separately, Congress enacted a new $6,000 senior deduction under the One Big Beautiful Bill Act, beginning in 2026.
That provision is statutory, not inflation-driven.
The Larger Story
This update reflects a return to pre-pandemic inflation dynamics.
From 2023 through 2025, brackets rose sharply as the IRS absorbed high CPI readings.
The 2026 adjustment signals that those catch-up increases are over.
Bracket indexing helps when income growth tracks inflation.
It does less when wages rise faster than CPI or when households face uneven cost pressures.
High earners feel this more because upper thresholds moved the least.
What It Means in Practice
Review projected 2026 income for marginal bracket exposure.
Expect limited relief if income growth exceeds CPI.
Higher earners should not assume indexing offsets tax liability increases.
Standard deduction increases may matter more than bracket shifts for many filers.
Credit eligibility still depends on income phaseouts, not just brackets.
Taxpayers should incorporate the 2026 brackets into withholding and estimated tax planning.
The 4% inflation adjustment for the bottom two brackets (10% and 12%) is a nice win for lower-income earners compared to the 2.3% adjustment for the higher brackets. It’s subtle, but it should provide some genuine relief against the rising cost of living.
Finally, some 'bracket creep' protection that actually has teeth. Seeing the top 37% bracket start at over $768,000 for joint filers is a reminder that while the tax rates aren't moving, the definitions of 'wealthy' are. If you aren't adjusting your 2026 withholdings now, you're just giving the government an interest-free loan on your own inflation.