5+ Big Changes Coming to Your Taxes for 2025-2026
5 min read
The Internal Revenue Service (IRS) just announced new tax adjustments that will affect nearly every filer, and the changes could mean slightly lower tax bills for many Americans.
The updates, driven by inflation and new federal tax provisions, increase the standard deduction, adjust income-tax brackets, and raise key tax credits like the Earned Income Tax Credit (EITC). In short: your paycheck may stretch a little farther, and inflation will “take less of a bite,” as one tax professional put it.
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1. The standard deduction is increasing.
According to the official announcement by the IRS, the standard deduction (the amount you can subtract from your income before taxes are calculated) will rise for all filing statuses over the next two years.
For the tax year 2025 (returns filed April 2026):
Single: $15,750 (up from $15,000)
Married filing jointly: $31,500 (up from $30,000)Head of household: $23,625 (up from $22,500)
For tax year 2026 (returns filed in 2027):
Single: $16,100
Married filing jointly: $32,200
Head of household: $24,150
2. You can earn more before hitting the next tax bracket.
The IRS also raised the income thresholds for each of the seven federal tax rates for 2026. These adjustments, designed to account for inflation, vary slightly across brackets but generally range from about 2-4%.
For single filers in 2026, tax brackets will look like this:
10% on the first $12,400 of taxable income
12% on income above $12,400
22% on income above $50,400
24% on income above $105,700
32% on income above $201,775
35% on income above $256,225
37% on income above $640,600
For married couples filing jointly, those thresholds roughly double (for example, the 37% rate starts around $768,700).
Bear with us a sec...
So when you “move into a higher tax bracket,” only the income that falls within that higher bracket gets taxed at the higher rate… not all of your income.
Example: Let’s say in 2026 you’re a single filer earning $60,000.
The first $12,400 is taxed at 10%.
The next chunk of income (from $12,401 to $50,400) is taxed at 12%.
Only the income above $50,400 — in this case, $9,600 — is taxed at 22%.
So even though you’re “in the 22% tax bracket,” you’re not paying 22% on all $60,000 — just on that small portion above the 22% threshold.
This system is called a progressive tax, meaning your income is taxed in layers (or brackets), with lower portions taxed at lower rates and only the top layer taxed at the highest rate you qualify for.
3. The Earned Income Tax Credit (EITC) gets a boost.
Low- and moderate-income workers will also see a small increase in the Earned Income Tax Credit (EITC), a refundable benefit that can boost refunds even for those who owe little or no tax.
For 2026, the maximum credit for taxpayers with three or more qualifying children will rise to $8,231, up from $8,046 the previous year.
4. Bigger family and child-related tax benefits are here.
Families will see several updates that could make a real difference next tax season. The Child Tax Credit (CTC) is increasing to $2,200 per qualifying child under age 17 for 2026, up from $2,000 in prior years. The refundable portion — the Additional Child Tax Credit — stays at $1,700 but will now automatically adjust with inflation, helping the credit keep pace with rising costs.
In addition, the adoption credit for families adopting a child with special needs (or incurring qualified adoption expenses) rises to $17,280 per child. The annual gift-tax exclusion increases to $19,000 per recipient, and the estate-tax exemption climbs to $13.99 million, offering more flexibility for long-term family and inheritance planning.
Together, these changes mean families can expect stronger support, both for raising children now and for building financial security for the future.
5. More pre-tax savings through your workplace.
For 2025, several common workplace benefits are getting inflation bumps. Employees can now set aside up to $3,300 in a health Flexible Spending Account (FSA), with $660 allowed to roll over year to year.
The qualified transportation and parking benefit also increases to $325 per month. These updates can help workers save more on medical, commuting, and dependent-care costs before taxes are taken out of their paychecks.
Other 2025 tax updates you should know:
Beyond deductions and credits, the IRS made several smaller adjustments worth noting:
Alternative Minimum Tax (AMT): The exemption rises to $88,100 for single filers and $137,000 for joint filers, keeping higher earners from being pulled into the AMT.
Medical Savings Accounts (MSAs): For 2025, self-only coverage must have a deductible between $2,850 and $4,300, while family coverage ranges from $5,700 to $8,550, with an out-of-pocket limit up to $10,500.
Foreign earned income exclusion: Workers living abroad can now exclude up to $130,000 in foreign income.
Unchanged provisions: The personal exemption remains at $0, and the itemized deduction cap stays eliminated under the 2017 Tax Cuts and Jobs Act.
These updates may not affect everyone, but they’re important for taxpayers managing pre-tax benefits, international income, or family-related expenses.
What it all means
Between higher deductions and inflation-adjusted brackets, many taxpayers will see modest relief in the coming years. Still, your exact outcome depends on your income level, filing status, and whether you claim dependents or itemize deductions.