The 2026 income tax brackets are out. Let the tax-planning strategy sessions begin.
Now's the time to get an idea of what bracket you'll fall into. And you can get a head start on strategizing ways to trim your tax bill next year.
Thanks to the IRS' annual inflation adjustment, it will take a little bit more taxable income to push you into the next highest tax bracket.
For example, married couples filing jointly in 2026 can have income up to $100,800, a $3,850 increase from this year, and remain in the 12% bracket. Similarly, higher-earning couples in the 22% bracket can report income up to $211,400, vs. $206,700 in 2025, before bumping up to the 24% bracket in 2026.
The brackets' move up gives U.S. taxpayers more breathing room if their income is inching closer to the top of a particular bracket.
"More income will be taxed at lower rates," said Tim Steffen, director of advanced planning at Baird.
Looking At Scenarios Of Tax Brackets
So, if your income stays the same in 2026, you'll pay a tad less in taxes due to the tax bracket changes and the increase in the standard deduction, which lowers taxable income. The savings for most people will be hundreds of dollars, not thousands, says Steffen.
Keep in mind, though, that if you get a raise next year, the IRS inflation adjustment acts more as an offset and your tax hit may be similar.
The seven tax brackets, which range from 10% to 37%, determine how much you'll pay on different slices of your taxable income.
Just because your total taxable income may fall into, say, the 22% tax bracket, doesn't mean every penny is taxed at that amount. If you're a married couple, for example, you will pay 10% on income up to $24,800; 12% on income between $24,801 and $100,800; and 22% on income above $100,801. You only pay the higher tax rate on income above a specific bracket's starting threshold.
Consider Next Year, Too
Steffen says any year-end tax planning should focus not just on this year, but next year as well. "There's a tax angle to every financial decision we make," said Steffen.
Indeed, the updated tax brackets give Americans a better read on how much they'll have to pay when they file their 2026 returns in 2027.
Knowing what the brackets are in advance can help taxpayers make better personal finance and tax-saving decisions. It can provide a sneak peek into what tax bracket you might land in next year. The information may also determine whether a Roth IRA conversion makes sense.
Bracket knowledge can also provide a heads-up on avoiding the costly jump-ups in tax brackets, such as the move from the 12% bracket to the 22% bracket, and the 24% bracket to the 32% bracket.
Strategic Roth IRA Conversions
With more dollars of income falling into each tax bracket, there's a chance to boost the size of a Roth conversion without jumping up to a higher tax bracket.
Roth IRAs, of course, have key benefits, such as tax-free withdrawals and no required minimum distributions (RMDs) for the contributor.
The catch is that all dollars converted to a traditional IRA to a Roth IRA are taxed as ordinary income. So, having a little more room at the top of a bracket can potentially free up more dollars for a Roth conversion.
A couple that falls into the 22% bracket in 2026 with traditional IRAs will have nearly $4,000 more in wiggle room at the top of the bracket. What's more, they'll also benefit from the $700 increase in the standard deduction to $32,200.
"It means you might be able to do a little bit more Roth conversion in a certain bracket," said Jeffrey Levine, professor of practice in tax planning at the American College of Financial Services.
If you were able to convert $30,000 this year, maybe you can convert $35,000 next year and still stay in the same bracket, says Levine.
Another plus: Deciding how much or how little — and when — to convert to avoid so-called "bracket busting" is 100% under your control, adds Steffen.
Roth conversions could make sense for retirees who were high earners during their careers and have high account balances in traditional IRAs. While their income may now have fallen to, say, the 22% bracket, RMDs at age 73 could push them back up into higher brackets.
The key to a Roth conversion is to see where you are in your current bracket, then see if there's room to get right up to the edge of the next bracket without going over.
Fill The Lower Brackets
"Fill it up" doesn't just apply to the gas pump. Filling up a tax bracket without spilling over into a higher tax bracket is a tax-saving strategy.
Knowing where you fall in a bracket in 2026 can help you manage your tax hit by smoothing out your income by making strategic withdrawals from accounts with different tax treatments. It can also assist you in figuring out how deductions can free up more room at the top of a tax bracket.
When it comes to filling up tax brackets, the key is to try to avoid major jumps that have a larger impact. Going from the 12% bracket to the 22% bracket, for example, or from 24% to 32%, can cost you much more in taxes.
"People should be particularly mindful of the big bumps," said Levine. "Those are pretty significant."
In contrast, jumping from the 10% to 12% bracket, or 22% to 24% bracket, will have a far smaller tax impact, Levine says.
Pay 0% On Capital Gains
It's important to note that the tax treatment of income and long-term capital gains are different. And just as income brackets are going up in 2026, so too is the income threshold for capital gains rates of 0%.
A long-term capital gains tax is a tax on the profit you earn from selling an asset, such as a stock, which you've owned for more than a year.
For 2026, the 0% capital gains rate applies to single filers with income up to $49,450 and joint filers with incomes up to $98,900.
The upside? "Maybe you can pull down a little bit more of your capital gains tax-free," said Levine. You might even be able to pay zero.
Levine offers the following example. A married couple with $100,000 in income that takes the standard deduction of $32,200 would have $67,800 in taxable income, which leaves you with $31,100 of remaining room in the 0% capital gains bracket ($98,900 minus $67,800). The takeaway: You could realize $31,100 in long-term capital gains without paying a single penny of federal tax on the gains.
The One Big Beautiful Bill Act boosted the standard deduction for single filers to $16,100 and for married couples filing jointly to $32,200.
And seniors over age 65 taking advantage of the bonus $6,000 deduction through 2028 could free up even more space in the 0% capital gains tax bucket.
Make Strategic Account Withdrawals
If your income is on the cusp of a higher bracket, there are ways to stay underneath that bracket and minimize taxes by prioritizing account withdrawals.
If you're close to crossing over into a higher bracket, take withdrawals from savings accounts first, as it won't boost your income. Your next best withdrawal option is a taxable brokerage account, as you might be able to get the 0% tax treatment or the lower 15% capital gains tax that most Americans pay. Withdrawals from traditional 401(k)s and IRAs would be a last resort, as distributions are treated as taxable income and can push you into the next higher tax bracket.
In short, don't forget to add income from investments into your tax bracketology calculation.
2026 Federal Tax Brackets With Each Bracket's Marginal Tax Rate, Based On A Taxpayer's Taxable Income
| Tax rate | Single filers | Married joint filers | Heads of households |
|---|---|---|---|
| 10% | $0 - $12,400 | $0 - $24,800 | $0 - $17,700 |
| 12% | $12,401- $50,400 | $24,801- $100,800 | $17,701- $67,450 |
| 22% | $50,401 - $105,700 | $100,801 - $211,400 | $67,451 - $103,700 |
| 24% | $105,701 - $201,775 | $211,401 - $403,550 | $103,701 - $201,775 |
| 32% | $201,776 - $256,225 | $403,551 - $512,450 | $201,776 - $256,200 |
| 35% | $256,226 - $640,600 | $512,451 - $768,700 | $256,201 - $640,600 |
| 37% | $640,601 or more | $768,701 or more | $640,601 or more |
Source: IRS
