IRS releases new income tax brackets for 2026; what older Americans need to know
The Internal Revenue Service today released the annual inflation adjustments and tax rate schedules for the 2026 tax year. These changes included details that emerged from President Trump’s ‘One Big, Beautiful Bill’ that was signed into law earlier this year. As we approach the 2026 tax season, it’s important to understand the key changes that may affect your finances, whether you’re working, retired, or managing estates. In addition to brackets, some changes were made to estate planning and medical savings accounts.
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What This Means for Older Taxpayers
If you’re nearing retirement or already there, the updates listed below could impact:
- Estate planning and gifting strategies
- Adoption and childcare credits for grandparents raising children
- Medical savings and flexible spending plans
- Foreign income exclusions if you live or work abroad in retirement
Understanding how these thresholds and benefits shift year to year can help you make smarter decisions with your money and avoid surprises come tax time.
Standard Deduction Highlights
• The standard deduction for tax year 2026 increases to $32,200 for married couples filing jointly, and increases to $16,100 for single taxpayers/married individuals filing separately.
• Also of note: for tax year 2025 (the taxes you will file in early 2026) the standard deduction is raised to $31,500 for married couples filing jointly, and increases to $15,750 for single taxpayers/married individuals filing separately.
Deduction Comparison: Married Filing Jointly
| Tax Year | Standard Deduction | Difference vs 2024 | Percent Change vs 2024 |
| 2024 | $29,200 | — | — |
| 2025 | $31,500 | + $2,300 | + 7.88 % |
| 2026 | $32,200 | + $3,000 | + 10.27 % |
Deduction Comparison: Single / Married Filing Separately
| Tax Year | Standard Deduction | Difference vs 2024 | Percent Change vs 2024 |
| 2024 | $14,600 | — | — |
| 2025 | $15,750 | + $1,150 | + 7.88 % |
| 2026 | $16,100 | + $1,500 | + 10.27 % |
Marginal Tax Rates for 2026
There are no changes to the top tax rate in 2026 as it remains 37%. However, here’s a full breakdown of where each tax bracket begins, depending on your filing status:
| Tax Rate | Single Filers | Married Filing Jointly |
| 37% | Over $640,600 | Over $768,700 |
| 35% | Over $256,225 | Over $512,450 |
| 32% | Over $201,775 | Over $403,550 |
| 24% | Over $105,700 | Over $211,400 |
| 22% | Over $50,400 | Over $100,800 |
| 12% | Over $12,400 | Over $24,800 |
| 10% | Up to $12,400 | Up to $24,800 |
Alternative Minimum Tax
| Filing Status | Exemption Amount | Phase-Out Begins At |
| Single | $90,100 | $500,000 |
| Married Filing Jointly | $140,200 | $1,000,000 |
Estate & Gift Planning Updates
- Estate Tax Exclusion: Now $15 million (up from $13.99 million in 2025).
- Annual Gift Exclusion: Still $19,000 per recipient.
- Gift to Non-Citizen Spouse: Increases to $194,000 (up $4,000 from 2025).
Family & Child-Related Credits
- Adoption Credit: Up to $17,670 in qualified expenses.
- Refundable portion: $5,120.
- Employer-Provided Childcare Tax Credit:
- Max credit increases from $150,000 to $500,000
- $600,000 for eligible small businesses.
Earned Income Tax Credit (EITC)
- Maximum EITC for families with three or more qualifying children:
$8,231 (up from $8,046 in 2025).
Health & Benefit Adjustments
| Benefit | 2026 Limit | Change from 2025 |
| Transportation Fringe (Monthly) | $340 | +$15 |
| Parking (Monthly) | $340 | +$15 |
| Health FSA Contribution Limit | $3,400 | +$100 |
| FSA Carryover Limit | $680 | +$20 |
Medical Savings Accounts (MSAs)
| Coverage Type | Deductible Range | Out-of-Pocket Max |
| Self-only | $2,900–$4,400 | $5,850 |
| Family | $5,850–$8,750 | $10,700 |
Foreign Earned Income Exclusion
Increases to $132,900 (up from $130,000 in 2025)
No Changes (Not Adjusted for Inflation)
Some provisions remain unchanged due to legislation:
- Personal Exemption: Still $0 (eliminated by the 2017 Tax Cuts and Jobs Act, now permanent).
- Itemized Deduction Limitation: Still eliminated, but high earners (37% bracket) may see limits on itemized deduction benefits.
- Lifetime Learning Credit:
- Phase-out remains for MAGI between $80,000–$90,000 (single)
- $160,000–$180,000 (joint), unchanged since 2020.
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