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Amid October’s government shutdown headlines, the IRS made a significant announcement without much fanfare: new tax brackets that will affect every taxpayer in the country (1).
The changes to brackets are not new. These are adjusted upwards each year to account for inflation, using the Consumer Price Index (CPI) as a guide.
This can be useful if your wages are only keeping up with inflation. But this year, the adjustment announcement didn’t seem like big news.
Maybe because the inflation between the tax brackets is not great either.
Here’s more about the tax bracket updates and what they could mean for you.
Tax bracket adjustments for fiscal year 2025 — including federal income tax brackets — increased by an average of about 2.8 percent, according to US Bank.
As CBS reports, this contrasts with the IRS raising the tax rate by 7 percent in 2023 and another 5.4 percent in 2024 to address continued post-pandemic inflation (2).
This year’s bump was modest, relatively speaking.
For individual filers, these are the new income tax categories (3):
10% fee: $0–$12,400
12% tax: $12,401 – $50,400
22% tax: $50,401–$105,700
24% tax bracket: $105,701–$201,775
32% tax bracket: $201,776–$256,225
35% tax bracket: $256,225–$640,600
37% tax: $640,601 and up
The upper limit of the lowest tax bracket (10%) has been increased from $11,925 in 2025 to $12,400 in 2026. This is an increase of 3.9%.
Meanwhile, the income threshold for the top marginal tax rate (37%) has been increased from $626,351 to $640,601 for people filing taxes next year. That’s less than a 2.3% increase.
Given that the increase in the marginal tax rate is below the current rate of inflation, high earners may want to find other ways to take advantage of tax advantages when they file a return (4).
For example, investing in commercial real estate allows you to take advantage of the tax benefits of depreciation and cost segregation, potentially reducing your taxable income. You can also take advantage of a 1031 exchange to transfer income from one property to another—without paying taxes right away.
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These are the new income thresholds for married couples filing jointly:
10% tax bracket: $0–$24,800 (up from $23,850 in 2025, a 3.9% increase)
12% tax: $24,801 – $100,800
22% tax bracket: $100,801–$211,100
24% tax bracket: $211,401–$403,550
32% tax bracket: $403,551–$512,450
35% tax bracket: $512,451–$768,700
37% tax bracket: $768,701 and up (from $751,601, a 2.3% increase)
Depending on your tax filing status and expected income, these new brackets should give you an idea of how much you might owe in taxes next year.
However, income thresholds are only one of many factors that ultimately determine how much you will have to pay to the government.
That’s why it may be worth working with a professional tax advisor to ensure you properly plan and optimize for tax season.
High-income households can work with platforms like Range to further reduce their tax burden.
The range is a streamlined and cost-effective way to manage your entire financial life. They provide tax recommendations based on your previous year returns and can assess your investment portfolios for tax loss harvesting opportunities as well.
Beyond taxes, Range also offers investment advisory services. While traditional advisors may charge fees from 0.5% to 2% of total assets under management (AUM), or $1,000 to $3,000+ for more comprehensive plans, Range offers fixed pricing with 0% AUM fees. This is a fraction of what you would pay with a regular certified financial planner.
You can even book a free demo with the Range team after answering a few quick questions about yourself and what you’re looking for from their experts.
Note that counseling services are not limited to high-income households. And finding the right advisor doesn’t have to be a long and complex process.
Advisor.com has made it simple to talk to licensed financial professionals in your area who can provide you with personalized guidance – including ways to reduce your tax burden.
Beyond tax planning, a professional advisor can also help you determine how many years you have left to invest before retirement and gauge your comfort level with market fluctuations—two key factors in building the right asset mix for your portfolio.
Through Advisor.com, you can schedule a free, no-obligation consultation to discuss your retirement goals and long-term financial plan.
The IRS hasn’t just updated the income thresholds to reflect inflation. There are general increased deductions, which are now:
$16,100 for single and married individuals filing separately
$24,150 for heads of household and
$32,200 for married couples filing jointly.
The Earned Income Tax Credit is also increased from $8,046 for the current tax year to $8,231 for families with at least three children in 2026.
Older Americans could enjoy a bigger break in 2026 thanks to the new $6,000 senior tax deduction — one of the tax changes featured in Trump’s One Big Beautiful Bill.
While the 2% to 4% increase in tax brackets may not be adequate for those who have experienced higher rates of wage growth or are facing rising prices, the new thresholds and wider deductions should provide more room to manage taxes next year.
We only rely on verified sources and credible third-party reports. For details, see our ethics and editorial guidelines.
US Bank (1); CBS News (2), (4); Tax Foundation (3)
This article provides information only and should not be construed as advice. Offered without warranty of any kind.
