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Amid headlines about the government shutdown in October, the Internal Revenue Service (IRS) quietly made a major announcement: new tax brackets that would affect every taxpayer in the country(1).
Changes to brackets are nothing new. The Consumer Price Index (CPI) is used as a guide, and is adjusted upward each year to reflect inflation.
This can be helpful if your salary is just keeping up with inflation. But this year, the announcement of adjustments doesn’t seem to be big news.
Maybe it’s because the tax brackets aren’t increasing much either.
Here’s more information about the tariff updates and what they mean for you.
According to U.S. Bank, tax bracket adjustments, including federal income tax brackets, will increase by an average of about 2.8% for the 2025 tax year.
According to CBS (CBS), this is in sharp contrast to the US Internal Revenue Service (IRS), which will significantly increase tax brackets by 7% in 2023 and another 5.4% in 2024 to deal with persistent inflation problems after the epidemic (2).
Relatively speaking, this year’s growth has been modest.
For individual filers, the following are the new income tax brackets (3):
10% tax bracket: $0–$12,400
12% tax bracket: $12,401–$50,400
22% tax bracket: $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 bracket: $640,601 and above
The cap for the lowest tax bracket (10%) has been increased from $11,925 in 2025 to $12,400 in 2026. The increase was 3.9%.
Meanwhile, the income threshold for individual taxpayers to pay the top marginal tax rate (37%) next year has been raised from $626,351 to $640,601. The increase was smaller, at 2.3%.
Given that the increase in the top marginal tax rate is less than the current rate of inflation, high earners may want to find other ways to take advantage of the tax benefits when filing their tax returns(4).
For example, investing in commercial real estate allows you to take advantage of depreciation and cost segregation tax benefits, potentially reducing your taxable income. You can also use a 1031 conversion to transfer gains from one property to another without paying taxes immediately.
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Here are the new income thresholds for married couples filing jointly:
10% tax bracket: $0 to $24,800 (up 3.9% from $23,850 in 2025)
12% tax bracket: $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 above (originally $751,601, up 2.3%)
Depending on your filing status and expected income, these new brackets should give you an idea of how much you may owe in taxes next year.
However, the income threshold is just one of many factors that ultimately determine how much you need to pay to the government.
That’s why it’s worth working with a professional tax advisor to ensure you plan and optimize tax season appropriately.
High-income households can partner with platforms such as Range to further reduce their tax burden.
Range is a simplified and cost-effective way to manage your entire financial life. They provide tax advice based on your previous year’s returns and can assess your portfolio for opportunities for tax losses.
In addition to taxes, Range also provides investment advisory services. While traditional advisors can charge fees of 0.5% to 2% of total assets under management (AUM), or $1,000 to more than $3,000 for more comprehensive plans, Range offers flat-fee pricing with 0% AUM fees. This is a fraction of what you would pay a typical certified financial planner.
You can even book a free demo with the Range team after answering a few simple questions about yourself and what you want from their experts.
Keep in mind that counseling services are not limited to high-income families. Finding the right advisor doesn’t have to be a long and complicated process.
Advisor.com makes it easy for you to speak with a licensed financial professional in your area who can provide personalized guidance, including ways to potentially lower your tax burden.
In addition to tax planning, a professional advisor can help you determine how many years you have left to invest before retirement and assess how comfortable you are with market fluctuations—two key factors in building the right mix of assets for your portfolio.
Through Advisor.com, you can schedule a free, no-obligation consultation to discuss your retirement goals and long-term financial plans.
The IRS didn’t just update the income thresholds to reflect inflation. It increases deductions across the board and now are:
$16,100 for singles and $16,100 for marrieds
$24,150 for head of household, and
$32,200 for a married couple filing jointly.
The earned income tax credit will also increase from $8,046 this tax year to $8,231 in 2026 for families with at least three children.
Senior Americans could take advantage of a bigger tax break in 2026 thanks to a new $6,000 senior tax credit — one of the tax changes outlined in Trump’s Big Beautiful Act
While increases in tax brackets of 2% to 4% may not be enough for those who have experienced higher wage growth or are struggling with rising prices, the new thresholds and wider deductions should give more wiggle room in tax administration next year.
We rely only on vetted sources and reliable third-party reports. For more information, see our Editorial Ethics and Guidelines.
Bank of America (1); CBS News (2), (4); Tax Foundation (3)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
