As a personal-finance advisor I’m frequently asked: “Will I pay more tax next year?” And the short answer is: it depends. The tax changes for 2026 don’t signal a sweeping overhaul of tax rates—but they do matter. They matter especially if you received a raise, changed your job, or are approaching retirement. They also matter if you’re watching your household budget and income taxes closely.
What’s changing
First, the IRS has adjusted the federal income-tax brackets and standard deductions for tax year 2026, to be filed in spring 2027. For example: the standard deduction for single filers rises to $16,100, heads of households to $24,150, and married couples filing jointly to $32,200. The seven marginal tax-rate tiers remain the familiar 10 %, 12 %, 22 %, 24 %, 32 %, 35 % and 37 % but their income thresholds are bumped higher to reflect inflation—and thus to guard against “bracket creep,” where inflation pushes you into a higher bracket without actually increasing your real purchasing power.
Among the key figures: for single filers the 12 % bracket extends up to about $50,400, and the 22 % bracket begins at around $50,401. For married couples it’s about double the single-income thresholds (for example, 22 % begins at ~$100,801 for joint filers). These increments are modest in percentage terms (roughly 2-3 % upward) but meaningful for taxpayers who are near a bracket boundary.
Why this matters for your budget
What does all this mean in practical terms? For one: if your income rose modestly during 2025 (say by cost-of-living increases or a promotion), you’re less likely to be penalised by jumping into a higher tax bracket next year purely because of inflation. That’s good news.
But it also means you shouldn’t simply assume everything is easier. If your income rose a lot, or you have multiple income streams (side-jobs, investment income, business income), you still could face higher marginal tax burdens. Therefore, a purposeful review now pays off.
For example: if you are considering a large withdrawal from a retirement account, are converting a traditional IRA to a Roth IRA, or have significant capital-gain income coming, knowing which tax bracket you will be in for 2026 is valuable. In fact, financial-planning experts point out that retirees and pre-retirees especially should monitor this, because the bracket thresholds affect timing of withdrawals and conversions.
Who is likely to gain the most
Middle-income earners who got small raises (say 2-5 %) may see relief, because the thresholds moved upward and their real income increase won’t trigger a higher tax rate.
Taxpayers who take the standard deduction (most of us) benefit from the higher deduction amounts, which means lower taxable income all else equal.
Seniors and older taxpayers: because some provisions also increased for them (such as standard deduction increases and certain credit thresholds) they might find slightly more breathing space for their budget.
Who still needs to be cautious
High-income earners: If your income moves significantly upward (bonus, business sale, capit al gain) you could still bump into higher brackets and face more tax.
Those with multiple income streams: If you earn from wages, self-employment, rental or investment income, tax withholding and estimated tax payments may need careful adjustment.
Anyone expecting large one-off income: A capital gain, sale of business, crypto gain, etc., can push you into higher brackets or trigger alternative minimum tax (AMT) concerns—even with the threshold changes.
Practical steps for your 2026 tax-planning now
Review your withholding / estimated tax: Since thresholds moved, your employer’s withholding (if you’re wage-income) or your estimated tax payments (if self-employed/investment income) might not align with your actual 2026 liability. It’s wise to use an up-to-date estimator and adjust now rather than waiting until 2027.
Project your income for 2026: Estimate your total income streams (wages, business, investments) and map which bracket you’ll land in. If you expect a jump (promotion, bonus, sale) model scenarios for ‘base income’ and ‘with jump’.
Consider timing of income and deductions: For example, if you have control over timing (e.g., deferring a bonus, accelerating deductions, or delaying a gain) it may make sense to align the event with a year where you’re in a lower bracket or have more deduction cushion.
Look at retirement withdrawals and conversions: For those approaching retirement or already retired, understanding your bracket may affect whether converting to a Roth now makes sense or whether you should hold off until a year where taxable income is lower.
Budget for changes: Even with these adjustments, tax bills are rarely comfortable surprises. Build flexibility into your household budget for possible tax-increases (or larger refunds) so you’re not caught off-guard in April/May.
A quick example
Let’s say Jane is single, expects income of ~$60,000 in 2026, and has no substantial side-income. With the higher standard deduction ($16,100) and the moved bracket thresholds, her taxable income may be ~$43,900, putting her well within the 22 % bracket but with a lower tax burden than if thresholds had remained static. She might see a few hundred dollars extra in take-home pay compared to the previous year’s structure (assuming all else equal). That extra amount can go toward building an emergency fund, paying down debt, or investing.
Now compare Mark and Lisa, married filing jointly, expecting combined income of ~$210,000 plus a one-time $50,000 bonus. Even though thresholds moved, that bonus could push them further into the 24 % or 32 % bracket depending on deduction/no deduction choices, and trigger planning decisions about tax-efficient investing or deferring income.
Stay alert to related benefit changes
It’s not just tax-bracket numbers. The IRS also updated other thresholds: for example, the basic exclusion amount for estates climbs to $15 million in 2026. The earned-income tax credit (EITC) maximum for families with three or more children increases as well. These changes mean that families eligible for those credits may get a bit more relief, and estate-planning for higher-net-worth individuals may shift accordingly.
Final thoughts
If you treat taxes as an after-thought, you may miss meaningful opportunities. The 2026 changes won’t revolutionise the tax landscape—but they will affect your budget, your withholding/estimated payments, and your options for retirement or investing strategy. The best habit is proactive: review your projected income, update your tax-planning with the new thresholds, adjust your budgeting and withholding accordingly, and consult with a qualified tax or financial professional if you’re facing complex income situations or one-time large events.
In short: taxes remain important, but with thoughtful planning you can use this reset of brackets and deductions to your advantage—not be a passive observer to what the tax code does to you.