IRS Updates for the 2026 Tax Filing Season: What You Need to Know

The IRS has announced the new tax brackets and adjustments to the standard deduction for the 2026 tax year, with changes designed to offset the impact of inflation. These annual adjustments help prevent the so-called “bracket creep,” which occurs when inflation pushes taxpayers into higher tax brackets without a real increase in their purchasing power.

Increase in Tax Bracket Thresholds

For 2026, taxpayers will need to earn more before falling into a higher tax bracket. Example: a single filer earning $50,000 will remain in the 12% bracket in 2026, compared to 22% in 2025.

The IRS applied these changes based on the Chained Consumer Price Index, as required by the 2017 tax law.

New Standard Deductions for 2026

• Married filing jointly: $32,200

• Heads of household: $24,150

• Single taxpayers and married filing separately: $16,100

Additionally, adults 65 and older may benefit from a temporary additional deduction of up to $6,000, as long as they meet income requirements. This provision from the One Big Beautiful Bill Act (OBBBA) is valid until the end of 2028.

Main Changes in Credits and Benefits

Earned Income Tax Credit (EITC)

The maximum credit for families with three or more children will increase to $8,231, up from the previous year.

Estate Tax

The exclusion amount for inheritances will rise to $15 million in 2026, compared to nearly $14 million in 2025.

Health Flexible Spending Accounts (FSA)

Workers will be able to contribute up to $3,400, an increase of $100.These contributions are pre-tax and can be used to pay for eligible medical expenses.

How Tax Brackets Really Work

The U.S. tax system is progressive: you do not pay the same rate on all your income. For example, a single taxpayer with $50,000 in taxable income in 2026 will pay:

• 10% on the first $12,400

• 12% on the remaining amount

This debunks the myth that moving into a higher bracket increases the tax rate on all your income.

Impact of the OBBBA on Taxes

The new law signed in July made many of the tax cuts from 2017 permanent. According to recent analyses:

• The average taxpayer could see a tax reduction of $3,752 in 2026.

• Benefits vary by income level:

  • Lower-income households would save an average of $150.

  • Higher-income taxpayers could save $12,540.