New 2026 Tax Brackets and How They Work

The IRS has released new tax brackets for 2026 and there’s good news. The brackets have increased again, meaning that you’ll have to make more before the amount you owe progressively jumps up. In addition, the One Big Beautiful Bill Act (OBBBA) permanently extended the seven marginal income tax rates originally established by the 2017 Tax Cuts and Jobs Act (TCJA); income thresholds will continue to be adjusted for inflation annually.

Below we’ll cover what the new tax brackets are and why the tax bracket you’re in isn’t the percent of your income that you’ll actually owe in tax.

2026 tax brackets

For individuals

If you’re single (known as an individual filer), your brackets are:

• 10 percent: Up to $12,400
• 12 percent: $12,401 to $50,400
• 22 percent: $50,401 to $105,700
• 24 percent: $105,701 to $201,775
• 32 percent: $201,776 to $256,225
• 35 percent: $256,226 to $640,600
• 37 percent: Over $640,600

People who are married but file separately (known as married filing separately) have the same tax brackets as individual filers do until the top two. Those amounts are:

• 35 percent: $256,225 to $384,350
• 37 percent: Over $384,350

For married couples filing jointly

If you are married and file a single tax return as a couple (known as married filing jointly), your brackets are:

• 10 percent: Up to $24,800
• 12 percent: $24,801 to $100,800
• 22 percent: $100,801 to $211,400
• 24 percent: $211,401 to $403,550
• 32 percent: $403,551 to $512,450
• 35 percent: $512,451 to $768,700
• 37 percent: Over $768,700

For heads of household

If you are unmarried, pay for more than half your household’s expenses and have a dependent (known as head of household), your brackets are:

• 10 percent: Up to $17,700
• 12 percent: $17,701 to $67,450
• 22 percent: $67,451 to $105,700
• 24 percent: $105,701 to $201,775
• 32 percent: $204,776 to $256,200
• 35 percent: $256,201 to $640,600
• 37 percent: Over $640,600

Calculating your marginal tax bracket vs. your effective tax rate

How tax deductions work

What you owe in taxes is the income on your W-2 form multiplied by your tax bracket percentage, right? Unfortunately, it’s not that simple.

The gross income on your W-2 isn’t likely to be the amount that is actually taxed. That’s because when you file, you’re probably going to take deductions that will lower your taxable income. This can help increase the amount of your tax refund. You may choose to take the standard deduction (which, in 2026 is $16,100 for single filers or $32,200 if you’re filing jointly) or a host of other deductions if you choose to itemize on your tax return. Your 1040 form helps you determine what your taxable income will be.

The standard deduction

When filling out your annual tax returns, chances are you (like most taxpayers) use the standard deduction instead of itemizing their deductions. That’s because the IRS sets a fixed dollar amount, adjusted annually for inflation, that reduces the amount of income on which a taxpayer is taxed. It’s less complicated than itemizing expenses and often results in a larger deduction and, thus, a lower tax bill for the majority of taxpayers.

Under OBBBA, for tax year 2026, the standard deductions are increasing as follows:

• For single and married filing separately: $16,100
• For married filing jointly and surviving spouses: $32,200
• For heads of households: $24,150

How progressive tax brackets work

The U.S. income tax system is a progressive tax, not a flat tax. That means as your income rises, so does the percentage that you pay in taxes—and your income is actually taxed in chunks at graduated rates that follow the steps of the tax brackets. And don’t assume that getting a raise could reduce your post tax take-home pay because of moving into the bottom end of a higher bracket. Rest assured that tax brackets only apply to the income within that bracket—not your entire salary. So, your overall take-home pay after a raise will likely increase since only the new money you earn above the next tax bracket will be taxed at the higher rate.

Here’s a simple example of what we mean. Let’s say you’re single, and after deductions, your taxable income is $70,000, which lands you in the 22 percent tax bracket. You won’t be paying 22 percent on all $70,000 (which would be $15,400 in federal tax):

• The first $12,400 will be taxed at 10 percent, which is $1,240.
• The income between $12,401 and $50,400 (or $37,999) will be taxed at 12 percent, or about $4,559.88.
• The income between $50,401 and $70,000 (or $19,599) will be taxed at 22 percent, or about $4,311.78.

So, in this example, your total 2026 federal income tax owed would be $10,111.66, which is substantially less than the $15,400 you would have owed if you paid a flat 22 percent on your entire taxable income.

Marginal tax rates vs. effective tax rates

Your marginal tax bracket is the tax rate you paid on your last dollar of income and is how you determine which tax bracket you’re in. Your effective tax rate, meanwhile, is the percentage of your income that you paid in taxes after all was said and done—in this case, a little less than 15 percent ($10,111.66/$70,000).

Changing tax brackets

Your tax bracket and effective tax rate aren’t something that you figure out once and then never again. For instance, if you got a raise in the last year, it could push you into the next higher tax bracket—that’s why the tax brackets also increase over time. On the flip side, if your income drops or you become eligible to take more deductions, you could fall into a lower tax bracket. So make sure you check each year to see what the new tax brackets are and how that could impact the amount you will pay.

Figuring out your taxes with the new brackets

Knowing what tax bracket you fall into is helpful for maintaining your financial well-being—you can use this worksheet if you want to estimate how much tax you’ll owe.

Of course, taxes are notoriously complicated, which can be daunting to many people. That’s where your Northwestern Mutual financial advisor or tax advisor can help. Together, you can create a plan to reduce the impact of taxes on your hard-earned income and make strategic decisions about saving for the future.

This publication is not intended as legal or tax advice. Consult with a tax professional for tax advice specific to your situation.