The IRS Just Updated the Rules for Your Wallet
Big news from the Internal Revenue Service (IRS)! They have just announced the new tax rules for the year 2026. If you earn money, this news is for you.
Every year, the IRS changes the “tax brackets” a little bit. They do this because of inflation. Inflation means things like food and gas cost more over time. To help you out, the IRS adjusts the tax rules so you don’t pay higher taxes just because you got a small cost-of-living raise.
Here is the simple scoop on what is changing and what it means for your money.
What Are Tax Brackets?
Think of tax brackets like buckets. If you fill up the first bucket with money, you pay a low tax rate on that money. If you make more money and it spills into the next bucket, you pay a slightly higher rate only on that extra money.
For 2026, the buckets got bigger! This is good news because it means you can earn more money before jumping into a higher tax “bucket.”
2026 Tax Brackets for Single People
If you are single and not married, here are your new numbers:
- 10% Tax: For income between $0 and $12,400
- 12% Tax: For income between $12,401 and $50,400
- 22% Tax: For income between $50,401 and $105,700
- 24% Tax: For income between $105,701 and $201,775
- 32% Tax: For income between $201,776 and $256,225
- 35% Tax: For income between $256,226 and $640,600
- 37% Tax: For income over $640,600
2026 Tax Brackets for Married Couples
If you are married and file your taxes together, your buckets are double the size:
- 10% Tax: For income between $0 and $24,800
- 12% Tax: For income between $24,801 and $100,800
- 22% Tax: For income between $100,801 and $211,400
- 24% Tax: For income between $211,401 and $403,550
- 32% Tax: For income between $403,551 and $512,450
- 35% Tax: For income between $512,451 and $768,700
- 37% Tax: For income over $768,700
A Bigger Standard Deduction for Everyone
The “Standard Deduction” is a freebie from the IRS. It is a chunk of your income that the government doesn’t tax at all. For 2026, this freebie is getting bigger!
- Single Filers: Your deduction goes up to $16,100.
- Married Couples: Your deduction goes up to $32,200.
- Heads of Households: Your deduction goes up to $24,150.
What this means: If you are single and earn $50,000, you only pay tax on roughly $33,900 of it because the first $16,100 is tax-free!
Good News for Savers: 401(k) Limits Increased
Do you save money for retirement in a 401(k) plan at work? You can now save even more.
- 401(k) Limit: You can now put up to $24,500 into your 401(k) in 2026.
- IRA Limit: For an Individual Retirement Account (IRA), you can now save up to $7,500.
If you are age 50 or older, you get a “catch-up” bonus. You can add an extra $8,000 to your 401(k), bringing your total possible savings to $32,500!
What Should You Do Now?
You don’t need to do anything right this second. These rules are for the money you earn starting January 1, 2026.
However, it is smart to check your paycheck in the new year. Since the tax brackets shifted, you might see a tiny bit more money in your take-home pay. Who doesn’t love a little extra cash?
Disclaimer: This article is for information only and is not official tax advice. Always talk to a tax professional about your own situation.
