IRS makes changes that will affect your taxes this year and next

By Jeanne Sahadi, CNN

(CNN) — The IRS on Thursday announced adjustments it is making to a host of line items on your federal tax return for this year and next. Those updates are the result of changes in inflation but also due to provisions in the new tax law enacted in July.

How the adjustments will affect you has everything to do with what deductions you take and what your taxable income will be.

But, generally speaking, “many taxpayers will see modest ‘relief’ simply because the deductions and thresholds move upward. Inflation will take less of a bite,” said Tom O’Saben, director of tax content at the National Association of Tax Professionals.

Among the changes are:

A higher standard deduction

Most filers claim the standard deduction, and they do so because it exceeds the value of the deductions they would otherwise take if they itemized.

The increases in the standard deduction by 2026 “will shift more income into the ‘zero bracket’ — (meaning it will not) be taxed because the deduction covers more,” O’Saben said.

For tax year 2025, returns for which will be due in April of next year, the new tax law raised the standard deduction to $15,750 for single filers, up from the $15,000 that had previously been scheduled. For married couples filing jointly, it will be $31,500, up from $30,000. And for heads of households, their standard deduction will be $23,625, up from $22,500.

From there, for tax year 2026, the IRS is adjusting the standard deduction for inflation — something it does every year. As a result, the standard will rise to $16,100 for single filers; $32,200 for joint filers; and $24,150 for heads of households.

New income tax brackets

The IRS also made inflation adjustments for 2026 to the income ranges that apply to each of the seven federal income tax rates. As the IRS has explained, “When your income jumps to a higher tax bracket, you don’t pay the higher rate on your entire income. You pay the higher rate only on the part that’s in the new tax bracket.”

The adjustments are not uniform — some ranges increased by roughly 3.9% while others increased by about 2.3% relative to this year. “The uneven increases are normal artifacts of the IRS’s inflation adjustment methodology — not a policy choice to favor one income level over another,” O’Saben said.

In 2026, you will pay:

• 10%: On the first $12,400 of taxable income ($24,800 for joint filers).
• 12%: On income over $12,400 ($24,800 for joint filers).
• 22%: On income over $50,400 ($100,800 for joint filers).
• 24%: On income over $105,700 ($211,400 for joint filers).
• 32%: On income over $201,775 ($403,550 for for joint filers).
• 35%: On income over $256,225 ($512,450 for for joint filers).
• 37%: On income greater than $640,600 ($768,700 for joint filers).

Larger earned income tax credit (EITC)

The EITC is an especially valuable credit for low-income households. Credits are a dollar-for-dollar reduction of the taxes you owe. And, since it is a refundable credit, it can increase your refund if you don’t have much or any income tax liability.

The IRS is increasing the value of the credit for next year. For instance, eligible tax filers with three or more children may claim a maximum of $8,231, up from $8,046 this year.

(You can find more information here on these and other adjustments the IRS is making for 2026.)

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