Overview

• The IRS published inflation-indexed 2026 income tax brackets and raised the standard deduction to $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.
• Long-term capital gains thresholds increased, with the 0% rate applying to taxable income up to $49,450 for single filers and $98,900 for joint filers, while the 15% and 20% brackets shift higher as well.
• The Tax Foundation estimates average after-tax incomes will rise about 5.4% in 2026, and the Tax Policy Center projects an average tax cut of roughly $2,900 with about 85% of households receiving a reduction.
• Key provisions shaping the 2026 outlook include a child credit of about $2,200 per child, a higher SALT cap near $40,000 for most households, new deductions tied to tips and overtime and auto-loan interest, and a temporary senior deduction available through 2028.
• The IRS began agency-wide furloughs tied to the federal shutdown, yet it instructed taxpayers to file and pay as usual, as the CBO flags that the law is projected to add at least about $3.4 trillion to deficits over the next decade.