2026 federal income tax brackets
Remember: brackets are marginal — if you're single with $60,000 of taxable income, only the dollars above $50,400 are taxed at 22%. Nobody pays their "bracket" on all their income.
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 | $0 – $17,700 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 | $17,700 – $67,450 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 | $67,450 – $105,700 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 | $105,700 – $201,750 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 | $201,750 – $256,200 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 | $256,200 – $640,600 |
| 37% | Over $640,600 | Over $768,700 | Over $640,600 |
Source: IRS 2026 inflation adjustments. These apply to 2026 income (returns filed in 2027).
Standard deduction vs itemizing
With the 2026 standard deduction at $16,100 single / $32,200 joint, most households don't itemize. Itemize only if the total of these exceeds your standard deduction:
- State & local taxes (SALT): capped at $40,000 for 2026–2029 under the One Big Beautiful Bill Act ($20,000 if married filing separately). Big relief for high-tax states vs the old $10,000 cap.
- Mortgage interest: on up to $750,000 of acquisition debt ($375,000 MFS).
- Charitable donations: cash and non-cash gifts to qualified charities.
- Medical expenses: only the amount above 7.5% of AGI.
Bunching: if you're near the threshold, stack two years of charitable gifts (via a donor-advised fund) into one year to itemize, then take the standard deduction the next. Alternating years beats itemizing "a little" every year.
Capital gains & dividends
| Holding period | Rate | Notes |
|---|---|---|
| Short-term (≤ 1 year) | Your ordinary income rate | Day-trading profits are taxed like wages — expensive |
| Long-term (> 1 year) | 0%, 15%, or 20% | Most investors pay 15%; 0% up to ~$48k single / ~$96k joint taxable income; 20% at high incomes |
| Qualified dividends | Same as long-term rates | Most US-stock dividends qualify |
Tax-loss harvesting: in a taxable brokerage, sell losers to offset winners (up to $3,000 of ordinary income per year, rest carries forward). Mind the wash-sale rule — don't rebuy the same security within 30 days. Net investment income tax: an extra 3.8% on investment income above $200k single / $250k joint.
Roth vs traditional: the tax view
- Traditional 401(k)/IRA: deduction now at your current marginal rate. Best when that rate is high (24%+) and you expect lower income in retirement.
- Roth: no deduction now; tax-free forever. Best at 10–12% brackets or when you're young with decades of compounding ahead.
- The tiebreaker most people miss: required minimum distributions. Big traditional balances force taxable withdrawals at 73/75. Roth money has no RMDs and gives you control over your retirement tax bracket. See Retirement.
Credits & deductions worth knowing
- Child Tax Credit: up to $2,200 per qualifying child under 17 (2026, per OBBBA) — a credit reduces tax dollar-for-dollar, worth far more than a deduction.
- Saver's Credit: 10–50% credit on retirement contributions for low-to-moderate earners — free money for saving.
- American Opportunity / Lifetime Learning credits: up to $2,500/yr for college costs (see Kids & College).
- HSA contributions: deductible "above the line" — they lower AGI even if you don't itemize.
- Student loan interest: up to $2,500 deductible, phases out at higher incomes.
- New 65+ bonus deduction: OBBBA added a temporary extra deduction for filers 65 and older (2025–2028) on top of the standard deduction.
- Electric vehicle / clean energy credits: rules changed significantly under OBBBA — verify current eligibility at IRS.gov before assuming a credit exists.
Self-employed? Read this twice
- You pay both halves of FICA: 15.3% self-employment tax (12.4% Social Security to $184,500 + 2.9% Medicare) on top of income tax. Budget ~25–35% of profit for taxes.
- Quarterly estimated taxes are due Jan/Apr/Jun/Sep. Miss them and penalties accrue — set up IRS Direct Pay and automate.
- Your best deductions: retirement contributions (Solo 401(k) up to $72,000), HSA, health insurance premiums, home-office, and the 20% QBI deduction on qualified business income. Full playbook in Business Owners.
Year-end strategies that work
- Fill your bracket: in a low-income year (job change, sabbatical, early retirement), do Roth conversions up to the top of your current bracket — pay 12% now instead of 24%+ later.
- Harvest gains at 0%: in the 0% capital-gains zone, sell and rebuy appreciated stock to step up your cost basis tax-free.
- Donate appreciated stock instead of cash: deduct the fair market value, never pay the capital-gains tax.
- Max pre-tax accounts before Dec 31 (401(k)); you have until April 15 for IRAs and HSAs.
- Check withholding with the IRS Tax Withholding Estimator — a big refund means you gave the IRS an interest-free loan.
FAQs
Should I do Roth or traditional 401(k)?
If you're in the 22% bracket or below and under 40, Roth is usually the better bet — decades of tax-free growth. In the 32%+ brackets, traditional usually wins. In between, split the difference. Try the Roth vs traditional calculator.
How do I pay less tax legally?
The big three: max pre-tax retirement accounts, use an HSA if eligible, and harvest investment losses. Beyond that: bunch charitable gifts, time income into low years, and locate assets tax-efficiently (bonds in pre-tax, stocks in Roth). Avoid anyone selling "secret" tax shelters — if it sounds too good, it's fraud.
Do I need to file quarterly taxes?
If you'll owe $1,000+ beyond withholding (typical for freelancers, landlords, business owners), yes — four times a year. The safe harbor: pay 100% of last year's tax (110% if high income) through withholding + estimates and you'll avoid penalties even if you underpay.
What records should I keep?
Keep returns and supporting docs 3 years minimum (7 if you underreported significantly). Keep property/investment purchase records until 3 years after you sell. A simple cloud folder per tax year beats a shoebox.