Most taxpayers will either save or lose a few hundred dollars in 2026, not because they did anything wrong, but because the IRS quietly changed the math. Tax brackets shifted, the standard deduction increased, and Congress passed the One Big Beautiful Bill, or OBBB, which locked in major tax changes and introduced several new deductions.
Here is what changed from 2025 to 2026 and how it may affect your tax bill.
Why 2026 Is Different From a Typical Tax Year
Every year, the IRS adjusts tax brackets and deductions for inflation. Normally, these changes are incremental. But 2026 is different.
The One Big Beautiful Bill made the Trump-era tax cuts permanent and added new, temporary deductions aimed at workers, families, and seniors. This makes 2026 the most significant update to individual taxes since 2017.
Updated 2026 Tax Brackets
The tax rates themselves did not change. They still range from 10 percent to 37 percent. What did change are the income thresholds.
For 2026:
• The 22 percent bracket begins around $50,400 for single filers and $100,800 for married couples filing jointly.
• The top 37 percent bracket now starts at about $640,600 for single filers and $768,700 for married couples.
In practical terms, this means many taxpayers whose income rose slightly last year will stay in the same tax bracket rather than being pushed into a higher one.
For example, a single filer earning $90,000 will likely pay less tax in 2026 than in 2025 purely because of inflation adjustments.
Higher Standard Deduction Means More Income Is Tax Free
The standard deduction increased across the board.
For 2026:
• Single filers and married filing separately can claim $16,100, up from $15,750.
• Married couples filing jointly can claim $32,200, up from $31,500.
• Heads of household can claim $24,150, up from $23,625.
These increases mean more of your income is shielded from tax, even if your earnings stayed the same.
Bonus Deduction for Seniors
Taxpayers age sixty-five or older receive an additional $6,000 per person through 2028. Married couples where both spouses qualify can claim up to an extra $12,000 on top of the standard deduction.
New Deductions Created by the One Big Beautiful Bill
The OBBB introduced several new above-the-line deductions that reduce adjusted gross income. These deductions apply from 2025 through 2028 and are subject to income limits.
No Tax on Tips
Workers in tipped industries can deduct up to $25,000 of reported tips. This deduction phases out at higher income levels but can significantly reduce taxable income for eligible workers.
No Tax on Overtime
Taxpayers can deduct overtime premium pay, up to $12,500 for single filers and $25,000 for married couples filing jointly.
Car Loan Interest Deduction
Taxpayers can deduct up to $10,000 in interest on loans for new, U.S.-assembled vehicles, subject to income limits.
Expanded Credits and Bigger SALT Deduction
Several credits and deductions became more generous in 2026.
Child Tax Credit
The Child Tax Credit increased from $2,000 to $2,200 per child and will now adjust automatically for inflation going forward.
Child and Dependent Care Credit
This credit now covers up to 50 percent of qualifying expenses, with higher income thresholds before the credit phases out. More middle-income families now qualify.
SALT Deduction Cap Increase
The state and local tax deduction cap increased from $10,000 to $40,000 and will remain indexed through 2029. This is especially beneficial for taxpayers in high-tax states like Illinois, California, and New York.
High-income taxpayers should note that while the Pease limitation remains repealed, there is now a soft cap that limits the overall benefit of itemized deductions at the top tax bracket.
Credits That Expired After 2025
Not every change favors taxpayers.
For 2026:
• Electric vehicle credits are no longer available for new purchases.
• Most green energy credits have expired.
• The moving expense deduction remains limited to active-duty military members only.
What These Changes Look Like in Real Life
Alyssa, a single filer earning $90,000, benefits from inflation-adjusted brackets and pays slightly less tax. If she earns tips or overtime, the new deductions could reduce her tax bill even further.
Alex and Jamie, a married couple earning $210,000, were near the 32 percent bracket in 2025 but remain in the 24 percent bracket in 2026, saving roughly $2,000.
Tara, a head of household earning $120,000 with two children, benefits from a higher standard deduction and larger child credits, potentially increasing her refund.
What to Review Before You File
Before filing your 2026 return, consider the following:
• Recalculate whether itemizing still makes sense or if the higher standard deduction is better.
• Keep detailed records if you earn tips or overtime to claim the new deductions.
• If you are sixty-five or older, confirm you are claiming the bonus senior deduction.
• If you live in a high-tax state, take advantage of the higher SALT cap while staying mindful of deduction limits.
The Bottom Line
For most taxpayers, 2026 taxes are slightly friendlier than 2025. Brackets moved up, deductions grew, and the One Big Beautiful Bill introduced several temporary benefits worth claiming.
If you earn tips or overtime, track your income carefully. If you are married, revisit your withholding. And if you are a senior, make sure you claim the additional deduction. The tax code quietly handed many taxpayers a raise.
If you want help understanding how these changes apply to your situation, Gordon Law can help you plan, file, and optimize your tax strategy.