The IRS has adjusted federal income tax brackets for the 2026 tax year to account for inflation. Here's what changes and how it could impact your wallet.

The upshot of the IRS changes is that you can make more money next year and still qualify for a lower rate on your gains. For the purposes of these brackets, the IRS looks at your taxable income, found by subtracting any deductions, standard or itemized, from your gross income for the year.

Federal income tax for 2025 and 2026 features seven brackets ranging from 10% to 37%. The U.S. employs a progressive tax system where higher income levels are taxed at higher rates. Understanding your taxable income and filing status is crucial for determining your specific tax bracket and effective tax rate.

The new IRS tax brackets move deductions up in the wake of President Donald Trump's "One, Big, Beautiful Bill."