2026 Federal Tax Bracket Changes Explained
Standard deductions rose across all five filing statuses, OBBB added four new above-the-line deductions, and bracket thresholds inflated ~2.8%. Here is everything that changed — and what did not.
Bottom line up front: For 2026, the standard deduction rises to $16,100 (single) and $32,200 (married filing jointly) per IRS Rev. Proc. 2025-32. Bracket thresholds shift up ~2.8%. OBBB (P.L. 119-21) adds deductions for overtime pay, tips, and auto-loan interest. Rates themselves are unchanged. Use the estimate your taxes after the 2026 bracket changes to run your own numbers.
What changed for 2026
Three categories of change took effect for the 2026 tax year. First, the IRS published inflation adjustments in IRS Rev. Proc. 2025-32 (issued October 2025), using the Chained Consumer Price Index (C-CPI-U) methodology mandated by IRC §1(f). This moves every bracket threshold and the standard deduction upward by approximately 2.8% relative to 2025 figures. Second, the One Big Beautiful Bill Act (OBBB, P.L. 119-21) permanently extended the Tax Cuts and Jobs Act rates and added several new above-the-line deductions. Third, certain capital gains thresholds also adjusted upward per Rev. Proc. 2025-32 §3.03.
The headline numbers: the standard deduction for single filers increases by $1,100 to $16,100; for married filing jointly it rises by $2,200 to $32,200. Because the standard deduction is what most American households claim — roughly 90% of filers after TCJA — this is the change that directly lowers taxable income for the vast majority of taxpayers (IRS Publication 17, current revision). The inflation-indexed bracket shifts also mean that a given dollar amount of income moves into lower brackets for 2026 than it would have in 2025, producing a modest reduction in real tax liability even with no change in nominal income.
Congress also made the OBBB the first significant structural change to above-the-line deductions since the SALT cap was introduced in 2017. The overtime exclusion, the tip exclusion, the auto loan interest deduction, and the senior additional deduction are all new items that did not exist prior to 2026 (P.L. 119-21, §§70201–70204).
Standard deduction by filing status
The table below shows the 2025 and 2026 standard deduction for all five filing statuses, with the dollar and percentage change. Source: IRS Rev. Proc. 2025-32 §3.01 (2026) and IRS Rev. Proc. 2024-61 §3.01 (2025). Treasury uses a C-CPI-U 12-month average comparison as the inflation measurement base per the methodology described in IRS Publication 17.
| Filing status | 2025 | 2026 | Δ |
|---|---|---|---|
| Single | $15,000 | $16,100 | +$1,100 |
| Married Filing Jointly | $30,000 | $32,200 | +$2,200 |
| Married Filing Separately | $15,000 | $16,100 | +$1,100 |
| Head of Household | $22,500 | $24,150 | +$1,650 |
| Qualifying Surviving Spouse | $30,000 | $32,200 | +$2,200 |
Note: Additional standard deduction for age 65+ and blindness is separate and also inflation-adjusted annually per IRS Rev. Proc. 2025-32 §3.02.
Marginal bracket changes
The seven marginal rates — 10%, 12%, 22%, 24%, 32%, 35%, and 37% — were locked permanently by OBBB §70101 (P.L. 119-21). What changed are the income thresholds at which each rate begins, inflated upward under IRC §1(f) via the Chained CPI-U. Below is the full 2026 bracket table for single filers, followed by a 2025 vs. 2026 side-by-side comparison.
| Rate | 2026 taxable income range (single) |
|---|---|
| 10% | $0 – $12,400 |
| 12% | $12,400 – $50,400 |
| 22% | $50,400 – $105,700 |
| 24% | $105,700 – $201,775 |
| 32% | $201,775 – $256,225 |
| 35% | $256,225 – $640,600 |
| 37% | $640,600+ |
| Rate | 2025 top of bracket | 2026 top of bracket |
|---|---|---|
| 10% | $11,925 | $12,400 |
| 12% | $48,475 | $50,400 |
| 22% | $103,350 | $105,700 |
| 24% | $197,300 | $201,775 |
| 32% | $250,525 | $256,225 |
| 35% | $626,350 | $640,600 |
| 37% | $626,350+ | $640,600+ |
The shift of roughly 2.1–2.3% across all bracket thresholds reflects the Chained CPI-U measurement basis used under IRC §1(f) and the Treasury inflation methodology (IRS Publication 17). For a single filer with stagnant nominal wages, the higher standard deduction and wider brackets effectively reduce real tax burden without any legislative rate change.
What OBBB adds
The One Big Beautiful Bill Act (P.L. 119-21, enacted 2025) introduced four new above-the-line deductions effective for the 2026 tax year. These are claimed on Schedule 1 (Form 1040) and reduce your adjusted gross income before the standard deduction is applied. They do not require itemizing.
Overtime premium exclusion (OBBB §70201)
The premium portion of overtime pay — the extra half-rate above the regular wage for hours worked beyond 40 per week — is excludable from federal income tax. The base hourly wage for overtime hours remains taxable; only the premium amount (typically 0.5× the regular rate) is excluded. The deduction applies to W-2 employees subject to FLSA overtime requirements. Phase-out begins at higher income levels; the exact threshold was set at $150,000 (single) and $300,000 (MFJ) per P.L. 119-21.
Tip income exclusion (OBBB §70202)
Cash tips received by employees in traditionally tipped occupations — food service, beverage service, hospitality, and similar — are excluded from federal income tax up to $25,000 per year. Tips are still subject to FICA payroll taxes (Social Security and Medicare). The exclusion applies only to employees in occupations where tipping is customary; the IRS will publish guidance clarifying eligible occupations per P.L. 119-21 §70202. Phase-out applies at incomes above the overtime exclusion thresholds.
Auto loan interest deduction (OBBB §70203)
Interest paid on a new passenger vehicle loan is deductible above-the-line up to $10,000 per year. The vehicle must be purchased new (not used), and the loan must be for a vehicle assembled in the United States to qualify. Phase-out begins at $100,000 AGI (single) and $200,000 AGI (MFJ). This deduction is not available for leased vehicles. It is claimed in addition to the standard deduction.
Enhanced senior deduction (OBBB §70204)
Taxpayers who are age 65 or older receive an additional $4,000 above-the-line deduction on top of the existing age-65 standard deduction add-on. This additional deduction phases out at higher income levels (phase-out thresholds to be confirmed in IRS guidance). It stacks with the standard deduction and the existing additional standard deduction for elderly filers under IRC §63(f).
All four OBBB deductions were enacted as part of P.L. 119-21 signed into law in 2025. The precise interaction rules, carryforward provisions, and final phase-out schedules are subject to IRS regulatory guidance. For the purposes of tax estimation, the headline caps above are what the law specifies.
How this affects your tax bill — three example scenarios
Scenario 1: Single filer, $85,000 W-2 income
| Gross income | $85,000 |
| − Standard deduction (2026, single) | −$16,100 |
| = Taxable income | $68,900 |
| 10% on $0–$12,400 | $1,240 |
| 12% on $12,400–$50,400 ($38,000) | $4,560 |
| 22% on $50,400–$68,900 ($18,500) | $4,070 |
| Estimated 2026 federal tax | $9,870 |
| Effective rate on gross | 11.6% | Marginal: 22% |
Scenario 2: Married Filing Jointly, $200,000 combined W-2 income
| Gross income | $200,000 |
| − Standard deduction (2026, MFJ) | −$32,200 |
| = Taxable income | $167,800 |
| 10% on $0–$24,400 (MFJ 10% bracket) | $2,440 |
| 12% on $24,400–$99,000 | $8,952 |
| 22% on $99,000–$167,800 ($68,800) | $15,136 |
| Estimated 2026 federal tax | $26,528 |
| Effective rate on gross | 13.3% | Marginal: 22% |
Scenario 3: Server — $52,000 base wages + $18,000 tips
Under OBBB §70202 (P.L. 119-21), tips from qualifying tipped occupations are excluded from federal income tax (subject to phase-out). Tips remain subject to FICA. This scenario assumes the server qualifies for the tip exclusion.
| Base wages | $52,000 |
| Tip income | $18,000 |
| Total gross | $70,000 |
| − Tip exclusion (OBBB §70202, up to $25,000) | −$18,000 |
| − Standard deduction (2026, single) | −$16,100 |
| = Taxable income | $35,900 |
| 10% on $0–$12,400 | $1,240 |
| 12% on $12,400–$35,900 ($23,500) | $2,820 |
| Estimated 2026 federal tax | $4,060 |
| Without tip exclusion (for comparison) | ~$7,340 |
| Tax savings from tip exclusion | ~$3,280 |
What has not changed
Several aspects of the federal tax system that taxpayers often ask about are unchanged for 2026:
FICA rates
Social Security payroll tax remains 6.2% for employees on wages up to the Social Security wage base (adjusted by SSA COLA for 2026 but the rate itself is unchanged). Medicare remains 1.45% with an Additional Medicare Tax of 0.9% on wages above $200,000 (single) or $250,000 (MFJ). OBBB did not change FICA rates.
Capital gains rate structure
The preferential 0%, 15%, and 20% long-term capital gains rates are unchanged. OBBB §70101 made this structure permanent. The income thresholds for LTCG brackets inflated upward per Rev. Proc. 2025-32 §3.03, consistent with the ordinary income bracket adjustments. The 3.8% Net Investment Income Tax (NIIT) on high earners under IRC §1411 is also unchanged.
AMT structure
The Alternative Minimum Tax (IRC §55) remains in place with its two-rate structure (26% and 28%). The AMT exemption amount and phase-out threshold are inflation-adjusted annually per Rev. Proc. 2025-32. The AMT does not affect most middle-income filers following the TCJA changes that raised exemptions significantly.
Seven bracket rates
The rate structure itself — 10%, 12%, 22%, 24%, 32%, 35%, 37% — is now permanent law under OBBB §70101 (P.L. 119-21). There is no longer an expiration date on the TCJA rate structure as there was when it was first enacted in 2017.
Frequently asked questions
Quick answers to the most common questions about 2026 federal tax changes.
What is the standard deduction for a single filer in 2026?
Did the 2026 tax bracket rates change from 2025?
What is the OBBB and how does it affect my 2026 taxes?
Are Social Security and Medicare taxes changing in 2026?
How do I estimate my 2026 federal income tax?
Estimate your 2026 tax
Put the numbers from this guide to work. The 2026 federal income tax calculator applies the updated standard deductions, the revised bracket thresholds from IRS Rev. Proc. 2025-32, and the four new OBBB above-the-line deductions (P.L. 119-21) to give you a bracket-by-bracket breakdown, your effective rate, and your marginal rate in seconds. No login required.
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Last reviewed: May 2026 · Sources: IRS Rev. Proc. 2025-32, IRC §1(f), IRS Publication 17, P.L. 119-21 (OBBB), Treasury Chained CPI-U methodology.
Estimates only — not professional tax advice. Consult a licensed CPA for your specific situation.
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