The US Internal Revenue Service (IRS) has unveiled its updated federal income tax brackets and standard deduction amounts for the 2026 tax year. These annual inflation adjustments, announced in October 2025, will directly affect the amount of tax millions of Americans – including UK-based expats and dual nationals – will owe when they submit their returns in 2027.
Understanding the 2026 Tax Bracket Shifts
In the United States, the federal income tax system uses progressive brackets. This means income is taxed at increasing rates as it exceeds certain thresholds, but only the portion of income within each higher bracket is taxed at the elevated rate. For the 2026 tax year, all bracket thresholds have been raised to account for inflation.
According to Jeremy Bearer-Friend, a tax policy expert and law professor at George Washington University Law School, these adjustments mean taxpayers will be able to earn slightly more before being pushed into a higher tax band. "These changes will impact taxpayers when they file in 2027," he noted, emphasising the forward-looking nature of the announcement.
Key Increases in Standard Deductions
A cornerstone of the annual update is the increase to the standard deduction, a set amount that reduces your taxable income. Caroline Bruckner, Managing Director of American University’s Kogod Tax Policy Center, highlighted its significance: "If the standard deduction increases, that means that they're going to have a lower taxable income, which means that they'll pay less taxes."
For the 2026 tax year, the standard deduction will rise to:
- $16,100 for single taxpayers and married individuals filing separately.
- $32,200 for married couples filing jointly.
- $24,150 for heads of households.
Bearer-Friend described these deduction increases as "probably the most important inflation adjustment" for the 2026 tax year. The deduction can also be influenced by other factors, such as whether the taxpayer is over 65, visually impaired, or claimed as a dependent.
Detailed 2026 Federal Income Tax Brackets
Here is a breakdown of the new income thresholds and corresponding tax rates for the 2026 tax year. The brackets differ based on whether you file as a single individual or as a married couple filing jointly.
For Single Filers:
- 10% rate: Income up to $12,400.
- 12% rate: Income over $12,400 up to $50,400.
- 22% rate: Income over $50,400 up to $105,700.
- 24% rate: Income over $105,700 up to $201,775.
- 32% rate: Income over $201,775 up to $256,225.
- 35% rate: Income over $256,225 up to $640,600.
- 37% rate: Income over $640,600.
For Married Couples Filing Jointly:
- 10% rate: Income up to $24,800.
- 12% rate: Income over $24,800 up to $100,800.
- 22% rate: Income over $100,800 up to $211,400.
- 24% rate: Income over $211,400 up to $403,550.
- 32% rate: Income over $403,550 up to $512,450.
- 35% rate: Income over $512,450 up to $768,700.
- 37% rate: Income over $768,700.
To illustrate, a single worker with a taxable income of $50,000 in 2026 would pay 10% on the first $12,400, and 12% only on the remaining $37,600. Their entire income is not taxed at 12%.
Planning Ahead for 2027 Filings
While these changes apply to income earned in the 2026 calendar year, taxpayers will not feel the effect until they complete their annual returns in 2027. The adjustments are designed to prevent "bracket creep," where inflation pushes earnings into higher tax brackets without an actual increase in purchasing power.
For US citizens and green card holders living in the UK, these updates remain critically important, as they are generally still required to file US tax returns reporting their worldwide income. Understanding the new brackets and higher standard deduction can aid in more accurate financial planning and estimated tax payments for the 2026 tax year.
