The Internal Revenue Service announced this week that Americans will see modest increases in standard deductions and tax bracket thresholds for 2026, part of the agency’s annual inflation adjustments. The adjustments will apply to tax returns filed in 2027.
The standard deduction will rise to $32,200 for married couples filing jointly in tax year 2026, up from $31,500 in 2025. The Trump-led “One Big Beautiful Bill” tax package passed earlier this year increased the 2025 standard deduction for taxes filed in the upcoming tax season early next year.
Single filers and married individuals filing separately will see their standard deduction increase to $16,100, while heads of household can claim $24,150.
IRS tax brackets for 2026 include: 37% for individual incomes over $640,600 ($768,700 for married couples filing jointly); 35% for incomes over $256,225 ($512,450 for married couples); 32% for incomes over $201,775 ($403,550 for married couples); 24% for incomes over $105,700 ($211,400 for married couples); 22% for incomes over $50,400 ($100,800 for married couples); 12% for incomes over $12,400 ($24,800 for married couples); and 10% for incomes of $12,400 or less ($24,800 for married couples).
Workers who contribute to health flexible spending accounts will be able to set aside more money in 2026, while medical savings account thresholds are also rising to keep pace with inflation.
The IRS announced the dollar limit for employee salary reductions contributed to health flexible spending arrangements will increase to $3,400 for tax years beginning in 2026, up $100 from 2025. For cafeteria plans that allow unused amounts to carry over, the maximum carryover increases to $680, a $20 bump from 2025.
Other adjustments include an increase in the earned income tax credit maximum to $8,231 for families with three or more children, up from $8,046 in 2025. The foreign earned income exclusion rises to $132,900 from $130,000.
Estates of people who die in 2026 will have a basic exclusion amount of $15 million, a substantial increase from $13.99 million in 2025. The alternative minimum tax exemption increases to $90,100 for single filers and $140,200 for married couples.
The annual adjustments reflect the IRS’s practice of indexing tax provisions to inflation to prevent “bracket creep,” where taxpayers move into higher tax brackets solely due to cost-of-living adjustments rather than real income growth.
