IRS sets 2026 brackets; revises 2025 deductions, details new senior and tip tax breaks
The IRS released the 2026 tax brackets and updated standard deductions, revising 2025 amounts to $31,500 (married filing jointly), $15,750 (single) and $23,625 (head of household) and setting 2026 standard deductions at $32,200 MFJ, $16,100 single and $24,150 HOH. The guidance also implements a new senior deduction beginning in 2025 ($6,000 per filer, up to $12,000 for two spouses, phasing out above MAGI $75,000 single/$150,000 joint), makes tips exempt from federal income tax beginning in 2025 with a $25,000 annual cap (tips still subject to Social Security and Medicare), raises the estate tax exclusion to $15 million in 2026, increases the maximum EITC for large families to $8,231 in 2026, and preserves the 2017 bracket structure with annual inflation indexing.
📌 Key Facts
- IRS revised the 2025 standard deductions under the new law to $31,500 (married filing jointly), $15,750 (single) and $23,625 (head of household), superseding last October’s figures.
- IRS confirmed 2026 standard deductions of $32,200 (married filing jointly), $16,100 (single) and $24,150 (head of household), modest increases (~2.2%) because 2025 amounts were boosted early by statute.
- The IRS released 2026 tax brackets; the law made the 2017 bracket structure permanent beyond 2025 and includes annual inflation indexing intended to reduce bracket creep.
- A new senior deduction starts in 2025: $6,000 per individual (up to $12,000 for two spouses), with the deduction phased out above modified adjusted gross income (MAGI) of $75,000 for single filers and $150,000 for joint filers.
- Beginning in 2025, tips are exempt from federal income tax with a maximum annual deduction of $25,000, though tips remain subject to Social Security and Medicare (FICA) reporting.
- The estate tax exclusion rises to $15 million in 2026 (up from $13.99 million in 2025).
- The maximum Earned Income Tax Credit for families with three or more children increases to $8,231 in 2026 (up from $8,046 in 2025).
📰 Sources (2)
- IRS revised 2025 standard deductions due to the new law: $31,500 MFJ; $15,750 single; $23,625 head of household (superseding last October’s figures).
- Confirms 2026 standard deductions: $32,200 MFJ; $16,100 single; $24,150 head of household, noting modest (~2.2%) increases because 2025 amounts were boosted early by statute.
- Details on new $6,000 senior deduction starting in 2025 (up to $12,000 for two spouses), with phase‑out above MAGI $75,000 single/$150,000 joint.
- No federal income tax on tips beginning in 2025, with a maximum annual deduction of $25,000; tips remain subject to Social Security and Medicare (FICA) reporting.
- Estate tax exclusion rises to $15 million in 2026 (from $13.99 million in 2025).
- Maximum Earned Income Tax Credit increases to $8,231 in 2026 for families with three or more children (up from $8,046 for 2025).
- Notes that the law made the 2017 bracket structure permanent past 2025 and that annual inflation indexing aims to prevent bracket creep.