The Internal Revenue Service (IRS) has officially released its new tax brackets for 2026, bringing a wave of inflation adjustments that could offer some relief to U.S. taxpayers. The updates affect more than 60 different tax provisions, including income tax brackets, standard deductions, capital gains, and estate tax thresholds.
Speaking with financial news outlets, Sammy Isuz, President and CEO of Heritage Financial, explained that the IRS’s annual adjustments are designed to offset the impact of inflation and help prevent taxpayers from being pushed into higher tax brackets as wages rise.
“It’s a good day for U.S. taxpayers,” Isuz said. “These inflation adjustments lower potential tax bills and help Americans keep more of what they earn.”
Key Adjustments in the 2026 IRS Tax Changes
1. Higher Standard Deductions
For the 2026 tax year, the IRS increased the standard deduction for both individuals and married couples:
- Single taxpayers: From $15,750 to $16,100
- Married couples filing jointly: From $31,500 to $32,200
The higher deduction means more income will be shielded from federal taxes, effectively reducing taxable income for most Americans who do not itemize deductions.
2. Updated Capital Gains Brackets
The capital gains tax brackets also saw upward adjustments:
- For single filers, the threshold to remain in the 0% bracket increased from $48,350 to $49,450.
- For married couples filing jointly, it went up from $96,700 to $98,900.
The changes mean taxpayers can earn slightly more before moving into the 15% or 20% capital gains brackets, offering modest savings for investors and retirees.
3. Estate Tax Exemption Raised
The federal estate tax exemption rose from $13.99 million to $15 million per person, allowing wealthy taxpayers to transfer more assets without triggering federal estate taxes. However, as Isuz pointed out, not all states follow these federal adjustments.
“Here in Massachusetts, for example, our exemption remains at $2 million per person and doesn’t automatically adjust for inflation,” he noted.
Why the IRS Makes These Annual Changes
The IRS performs inflation adjustments every year to ensure tax brackets and deductions keep pace with rising living costs. Without these updates, taxpayers could end up paying more simply because their wages or investment returns increased nominally, even if their purchasing power stayed the same.
“These adjustments prevent so-called ‘bracket creep,’ where inflation pushes taxpayers into higher brackets even though their real income hasn’t increased,” Isuz explained.
What It Means for Taxpayers
The new IRS tax changes for 2026 are intended to ease the burden on Americans by expanding income thresholds, deductions, and credits in line with inflation. Taxpayers should review their withholding and estimated payments early in 2026 to make sure they align with the updated brackets.
Financial experts recommend consulting a tax professional to understand how these IRS tax adjustments could impact individual situations, especially for those with investment income or significant estate assets.
As Isuz concluded, “Anytime you’re talking about money, taxes, and inflation, clarity matters. These changes may not solve everything, but they help keep taxes fair as the economy shifts.”
