Tax laws 2026: Tax brackets and deductions

Each year, the IRS adjusts more than 60 tax provisions to keep income tax brackets, deductions and other inputs in line with inflation. For the 2026 tax year, these updates affect federal income tax brackets, deductions and contributions limits.

The July 2025 passage of the One Big Beautiful Bill Act established many new tax laws that became effective immediately and made permanent many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire at the end of 2025.

Review updates to tax brackets, deductions and retirement contributions to guide your financial planning.

2026 tax brackets

For the 2026 tax year, the seven federal tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These tax brackets determine your top marginal tax rate based on your taxable income.

A key income threshold to watch for high-income filers is $201,775 for single filers and $403,550 for married couples filing jointly. Those are the respective thresholds for moving up from the 24% tax rate bracket to the higher 32% rate bracket.

The top marginal income rate of 37% will apply to single filers with taxable income above $640,600 and, for married couples filing jointly, taxable income above $768,700.

2026 standard deduction

The standard deduction 2026 is $16,100 for single filers, $32,200 for married filing jointly and $24,150 for heads of household. This deduction represents the amount of income you can exclude from taxes before the above tax rates begin to apply.

In addition, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,350 or the sum of $450 and the individual’s earned income.

2026 senior deductions

Adults age 65 and older can claim an extra standard deduction, in addition to the base amount. The amount is determined by your filing status and whether you or your spouse (if filing jointly) is blind.

From 2025 to 2028, adults age 65 and older can also claim a temporary bonus deduction of $6,000 if single or $12,000 if married filing jointly.

For the 2026 tax year, the total standard deduction plus age deduction plus bonus deduction for those age 65 and older is at least $24,750 for a single person and at least $48,300 for a married couple filing jointly.

However, income thresholds apply. Only single filers with modified adjusted gross income (MAGI) of $75,000 or below, or married couples with MAGI of $150,000 or below, can claim the full bonus deduction. It gradually phases out for those with incomes above those thresholds.

2026 capital gains tax brackets

Long-term capital gains face different tax brackets and rates than ordinary income. It’s possible for people with lower income to pay no long-term capital gains tax when selling appreciated assets that they have held for more than a year.

2026 Net Investment Income Tax

The Net Investment Income Tax (NIIT) applies a 3.8% tax to certain investment income for individuals, estates, and trusts with income above a set threshold.

Net investment income generally includes interest, dividends, capital gains, and other categories defined by the Internal Revenue Service (IRS).

NIIT is calculated at 3.8% of the lesser of your net investment income or the amount your MAGI exceeds the threshold. If your MAGI is below the threshold—even if you have investment income—you won’t owe NIIT. The thresholds don’t adjust for inflation.

2026 alternative minimum tax

The alternative minimum tax (AMT) exemption for 2026 is $90,100 for single filers and $140,200 for married couples filing jointly. This tax closes loopholes for those in higher tax brackets.

For the 2026 tax year, the AMT exemption is reduced by 50 cents for every dollar over the AMT income (AMTI) threshold. The exemption amount and phaseout threshold may be adjusted annually for inflation.

2026 child tax credit

The maximum child tax credit for 2026 is $2,200 per qualifying child. Qualified taxpayers may receive a refund of up to $1,700 in 2026 as part of the additional child tax credit. Both amounts may be adjusted annually for inflation.

However, eligibility rules and income thresholds apply. To qualify for the tax credit, a child:

• Must be under age 17 at the end of the tax year.
• Be listed as a dependent on your tax return.
• Live with you for more than half the year.
• Meet citizenship requirements and have at least one parent or guardian also meet citizenship requirements.

Additionally, the child tax credit is only available for taxpayers with MAGI up to a certain threshold, after which it phases out.

2026 SALT deduction limits

For the 2026 tax year, the SALT deduction limit is $40,400 for most filers and $20,200 for married couples filing separately. This limit and phaseout threshold will temporarily increase through tax year 2029.

This deduction amount only applies to those with MAGI up to a certain threshold. Above that threshold, the deduction amount is reduced by 30% for every dollar over the threshold, and eventually, the cap reverts to $10,000 for most. The limit is based on your tax filing status and only applicable if you itemize your deductions.

The deduction limit and phase out thresholds will increase by 1% every year through tax year 2029. After that, the SALT deduction is permanently reduced to $10,000 ($5,000 for married couples filing separately).

2026 gift tax exclusion and lifetime estate tax exemption amounts

The 2026 gift tax exclusion allows the first $19,000 of monetary gifts to any person to be excluded from tax. The exclusion is $190,400 for gifts to spouses who are not citizens of the U.S.

For 2026, the federal estate tax exemption is $15 million per individual and $30 million for married couples filing jointly. This amount may be adjusted annually for inflation.

2026 retirement plan contribution limits

The IRS increased retirement account contribution limits for 2026, with the 401(k) standard contribution limit rising to $24,500 and the traditional or Roth IRA limit reaching $7,500. Other retirement plan contribution limits include:

• The traditional or Roth IRA catch‑up contribution limit for individuals aged 50 and over is $1,100 for the 2026 tax year.
• Contribution limits for a simplified employee pension (SEP) IRA in 2026 are $72,000 or 25% of the employee's compensation, whichever is lower. The maximum compensation that can be considered for SEP IRA contributions in 2026 is $360,000.
• Individuals with a SIMPLE IRA can contribute up to $17,000 in 2026. Individuals aged 50 and older can contribute an additional $4,000 in catch-up contributions. (See exception for employees ages 60-63 below.)
• The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is $24,500 in 2026.
• The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan increases to $8,000 for 2026. Participants 50 and older generally can contribute up to $32,500 in 2026. (See exception for employees ages 60-63 below.)
• Due to a provision of the Secure 2.0 Act, a higher catch-up contribution limit applies for employees ages 60, 61, 62 and 63 who participate in these plans. For 2026, this higher catch-up contribution limit remains $11,250. A higher catch-up contribution limit of $5,250 also applies for individuals ages 60-63 who contribute to a SIMPLE IRA.
• Review the Roth IRA income limits in 2026.

Here are the 2026 contribution limits at a glance:

Frequently asked questions

How do the new tax laws 2026 impact retirement savings?

New 2026 tax laws increase contribution limits for 401(k)s and 403(b)s to $24,5000 and for traditional and Roth IRAs to $7,500. Catch up contributions for individuals age 50 and over also increased in 2026.

Are the 2026 tax brackets permanent?

Yes, the seven federal tax brackets are now permanent under the 2025 OBBBA legislation. The income thresholds for each bracket will continue to be adjusted annually for inflation.

Who benefits from the temporary bonus deduction?

Individuals age 65 and older who meet specific income requirements can claim the temporary bonus deduction. Single filers with a modified adjusted gross income (MAGI) below $75,000 and married couples filing jointly with a MAGI below $150,000 receive the full benefit. It gradually phases out for those with incomes above those thresholds.

Take steps to optimize your taxes and finances

To make the most effective long-term financial decisions, consider working with a tax and financial professional to review how annual changes to the tax code affect your financial plan.

Learn how we can help you design a plan to grow and protect your wealth.