The IRS is expected to announce its 2026 tax bracket updates in October, and millions of Americans could benefit from lower effective tax rates next year. These annual inflation adjustments are designed to prevent “bracket creep,” where pay raises push workers into higher tax brackets without improving their standard of living.
Experts say the 2026 brackets will reflect a 2.7% inflation adjustment overall, with an even larger bump—about 4%—for the lowest income bands, thanks to a new federal tax law passed in July.
What’s changing in 2026?
According to projections from Bloomberg Tax, here’s what to expect:
- All federal income tax brackets will shift higher to account for inflation.
- The 10% and 12% brackets will rise about 4%—more than usual—due to changes in the new law.
- The individual tax rates themselves won’t change, staying at 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
That means you’ll need to earn more income next year to move into a higher bracket, possibly reducing your overall tax bill—even if your salary increases.
Example: What it means for taxpayers
Here’s how the projected 2026 changes might impact a single filer earning $50,000:
- In 2025, they likely fall into the 22% tax bracket.
- In 2026, they’d remain in the 12% bracket based on new thresholds.
Why? Because more of their income will fall under the lower rates before climbing into higher ones.
“These adjustments ensure your purchasing power isn’t eroded by inflation,” said Amber Gorski of Bloomberg Tax. “Without them, key deductions and thresholds would lose value every year.”
Key features of the 2026 tax bracket update
Aside from shifting income thresholds, the July 2025 tax law—referred to by Republicans as the “big, beautiful” tax and spending bill—brings several changes that affect working- and middle-class taxpayers:
- Extra $6,000 standard deduction for seniors
- Eliminated taxes on overtime and tipped income for qualifying workers
- Locked in the current tax rates, preventing a return to pre-2017 levels (where the top rate was 39.6%)
When will the IRS announce the official changes?
The IRS typically announces inflation-related tax updates between mid-October and early November. While Bloomberg’s projections are close, the official IRS guidance will determine the final thresholds.
These adjustments are based on the chained Consumer Price Index (C-CPI-U), which tends to reflect slower inflation growth than the traditional CPI. The IRS has followed this method since the 2017 Tax Cuts and Jobs Act.
What you can do now
- Check your current bracket to estimate how the new thresholds will affect your 2026 tax return.
- Plan ahead for withholding or estimated payments using the IRS calculator once new tables are published.
- Stay updated: The official IRS release will clarify any remaining questions, including standard deduction levels and tax credit eligibility.
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