How the IRS’s New 2026 Tax Brackets Will Affect Your Bill
By Brian Famigletti, Managing Director & Head of Marketing
What Are the New Tax Brackets?
The IRS in early October unveiled its new 2026 tax brackets, updated to reflect inflation. The seven tax brackets at 10%, 12%, 22%, 24%, 32%, 35%, and 37% will not change, due to the One Big Beautiful Bill Act (OBBBA) that President Donald Trump signed in July. However, the income threshold for each rate will increase.
This means that, even if your salary is higher next year, your tax rate might not change. And some taxpayers who find themselves earning the same or less might see their tax rate decrease. Married couples who file taxes together and make up to $403,550, for instance, will remain with a top tax rate of 24%, compared to $394,600 in 2025.
The IRS adjusted the tax bracket thresholds by about 2.7% over the prior year, similar to the previous tax year’s adjustment of 2.8%. The new tax brackets will generally apply to income earned in 2026 and will be reported on returns filed in 2027.
Other IRS Changes in 2026
The IRS will also increase the standard deduction, or the baseline amount by which a filer can reduce their taxable income, based on filing status and age. In 2026, the standard deduction will rise to $32,200 for married couples filing jointly, and $16,100 for single taxpayers or married people filing separately. The standard deduction for heads of households will be $24,150.
Single filers in the highest tax bracket — earning $640,601 or more in 2026 — will see a 35% cap on itemized deductions next year. In other words, these filers will see a reduction in taxable income of 35 cents on the dollar, down $0.02 from the prior year.
The gift tax exclusion will remain the same in 2026: $19,000 is the most you can give a person in a year, without having to declare it on your taxes. That amount doubles for married couples. Keep in mind that if the value of your gift exceeds $19,000, you still might not have to pay taxes on the asset, assuming you haven’t also hit your lifetime gifting limit.
New Tax Rules’ Impact on Estate Planning
The lifetime estate tax exemption has increased under the OBBBA to a $15 million cap. The estate tax exclusion establishes which estates will face taxes after the owner’s death. Beginning next year, estates valued at $15 million or below won’t be subject to estate tax — an increase of more than $1 million from 2025.
While the OBBBA makes these changes permanent, future legislation could always reverse them. As such, high-net-worth individuals might consider transferring assets sooner rather than later to take advantage of these favorable conditions. Assets will likely appreciate, so transferring them now could help you give a higher-valued gift, tax-free.
Need help navigating advanced estate planning techniques? Speak with an expert at Griffin Asset Management today.
Sources:
NBC News: Tax brackets are changing. See how much you’ll owe starting next year.
NerdWallet: IRS Announces 2026 Income Tax Brackets, Updated Standard Deduction
Kiplinger: What is the Gift Tax Exclusion for 2025 and 2026?
Davis + Gilbert Law: After the One Big Beautiful Bill: Estate Tax Updates
Plante & Moran: 2025 wealth transfer planning guide: Key strategies for families
