As the famous saying goes, there are only two certainties in life: death and taxes. And every taxpayer should be aware of major changes to the tax code for the 2026 tax year. These include the tax brackets that dictate how much people will pay based on how much income they make each year.
The Internal Revenue Service (IRS) recently released changes to the 2026 tax brackets, which will largely affect people in 2027 when they file their 2026 return. Here are three key changes to be aware of.
Image source: Getty Images.
1. "Bracket creep"
Due to inflation, it is common for the IRS to at least slightly adjust tax brackets higher each year to account for inflation. This phenomenon is called "bracket creep," where inflation could push many people into a higher tax bracket if the brackets aren't raised. Here are the changes for single filers in 2026:
| Rate | 2025 Wages | 2026 Wages |
|---|---|---|
| 37% | >$626,350 | >$640,600 |
| 35% | >$250,525 | >$256,225 |
| 32% | >$197,300 | >$201,775 |
| 24% | >$103,350 | >$105,700 |
| 22% | >$48,475 | >$50,400 |
| 12% | >$11,925 | >$12,400 |
| 10% | <$11,925 | <$12,400 |
Here are the changes for joint filers:
| Rate | 2025 Wages | 2026 Wages |
|---|---|---|
| 37% | >$751,600 | >$768,700 |
| 35% | >$501,050 | >$512,450 |
| 32% | >$394,600 | >$403,550 |
| 24% | >$206,700 | >$211,400 |
| 22% | >$96,950 | >$100,800 |
| 12% | >$23,850 | >$24,800 |
| 10% | <$23,850 | <$24,800 |
Source: Motley Fool/IRS
2. The standard deduction is also increasing
The standard deduction is the amount a tax filer or joint filers can deduct from their taxes if they choose not to itemize their deductions, which can be more complicated. President Donald Trump's large spending bill that Congress passed earlier this year raised the standard deductions for the 2025 tax year, meaning these will take effect when people file their return early next year.
Single filers will see their 2025 standard deduction increase by $1,150 to $15,750. Head-of-household filers will see their standard deduction increase by $1,725 to $23,625, while joint filers will see an increase of $2,300 to $31,500.
In 2026, those amounts will increase again. Single filers will see their standard deductions rise to $16,100; heads of households will see their deductions rise to $24,150, and joint filers' figure will increase to $32,200.
3. A large, temporary boost to the SALT deduction
The state and local tax deduction (or SALT deduction) enables people who choose to itemize their deductions to write off select taxes levied by state and local governments. Some potential qualifying deductions include real estate taxes, personal property taxes, state and local income taxes, and sales taxes.
Under the Trump Administration in 2017, Congress, through The Tax Cuts and Jobs Act, limited the SALT deduction to $10,000 per year for either property and state income taxes or sales taxes, but not both.
Trump's spending package earlier this year significantly raised the SALT deduction to a $40,000 limit temporarily from the 2025 to 2029 tax years, or $20,000 per person for married people who file separately. However, for single or joint filers making over $500,000 per year, the SALT limit is phased down at a 30% rate for every dollar of income above this threshold. For workers who earn a modified adjusted gross income of $600,000, the deduction reverses back to the $10,000 limit.
Remember that the SALT deduction only applies to those taxpayers who itemize. According to the nonpartisan Tax Policy Center, 31% of all individual tax returns itemized deductions in 2017, but that number fell significantly to 10% in 2022.
The Tax Policy Center found that high-income earners are more likely to itemize, although higher standard deductions since the Tax Cuts and Jobs Act have made a wider array of people more likely to take advantage of them.
