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These changes will impact taxpayers when they file in 2027
Katie HawkinsonMonday 01 December 2025 15:44 GMTComments
open image in galleryThe IRS adjustments mean that taxpayers will be able to make a bit more money before paying higher taxes, according to one expert (Getty Images)SPONSORED BY CREDIT KARMAThe Independent Money channel is brought to you by Credit Karma.
The Internal Revenue Service has announced new standard deductions and federal income tax brackets for tax year 2026.
The federal tax agency announced the new brackets in October, which are typically adjusted each year to account for inflation. Standard deductions — which reduce the amount of income subject to being taxed — have also increased. These changes will take effect in 2026, and impact taxpayers when they file their taxes in 2027.
In the U.S., workers pay taxes as a percentage of their income, in segments known as tax brackets. But if you start making more money, you don’t pay that higher tax on all of your earnings.
Instead, you only pay a higher rate on the portion of income that falls within the higher bracket, according to the IRS. For example, consider a worker with a taxable income of $50,000. In 2026, that worker's income up to $12,400 will be taxed at 10 percent. The remaining amount — in the “$12,401-$50,400” bracket — will be taxed at 12 percent.
These adjustments mean that taxpayers will be able to make a bit more money before paying higher taxes, according to Jeremy Bearer-Friend, a tax policy expert and law professor at George Washington University Law School.
open image in galleryAn employee sorts through documents at an IRS Processing Facility in Austin, Texas. The federal tax agency announced new brackets in October, which are typically adjusted each year to account for inflation (Getty Images)Here’s what you need to know about the new standard deduction and income tax brackets, based on your filing status and income.
A bump in standard deductions
A standard deduction is a “specific dollar amount that reduces the amount of taxable income,” and is typically adjusted annually for inflation, according to the IRS.
Generally, a taxpayer’s standard deduction amount depends on their filing status. Other factors can impact the standard deduction, including whether the taxpayer is 65 or older, visually impaired, or considered a dependent by another taxpayer, according to the IRS.
In 2026, the standard deduction will increase to $16,100 for single taxpayers, and married people filing separately. For married couples filing their taxes jointly, the standard deduction will increase to $32,200. For heads of households, the standard deduction will increase to $24,150.
These increases are “probably the most important inflation adjustment” for tax year 2026, Bearer-Friend said. The deductions are also likely to save some taxpayers’ money, according to Caroline Bruckner, the managing director of American University’s Kogod Tax Policy Center.
“If the standard deduction increases, that means that they're going to have a lower taxable income, which means that they'll pay less taxes,” she told The Independent.
open image in galleryGenerally, a taxpayer’s standard deduction amount depends on their filing status. Other factors can impact the standard deduction, including whether the taxpayer is 65 or older, visually impaired, or considered a dependent by another taxpayer (Dragana Gordic - stock.adobe.com)10 percent tax rate
For individual filers, incomes of $12,400 or less will be taxed at a 10 percent rate. For married people filing jointly, incomes of $24,800 or less will be taxed at a 10 percent rate.
12 percent tax rate
For individual filers, incomes over $12,400 will be taxed at a 12 percent rate. For married people filing jointly, incomes over $24,800 will be taxed at a 12 percent rate.
22 percent tax rate
For individual filers, incomes over $50,400 will be taxed at a 22 percent rate. For married people filing jointly, incomes over $100,800 will be taxed at a 22 percent rate.
24 percent tax rate
For individual filers, incomes over $105,700 will be taxed at a 24 percent rate. For married people filing jointly, incomes over $211,400 will be taxed at a 24 percent rate.
32 percent tax rate
For individual filers, incomes over $201,775 will be taxed at a 32 percent rate. For married people filing jointly, incomes over $403,550 will be taxed at a 32 percent rate.
35 percent tax rate
For individual filers, incomes over $256,225 will be taxed at a 35 percent rate. For married people filing jointly, incomes above $512,450 will be taxed at a 35 percent rate.
37 percent tax rate
For individual filers, incomes over $640,600 will be taxed at a 37 percent rate. For married people filing jointly, incomes above $768,700 will be taxed at a 37 percent rate.
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