IRS Unveils 2026 Tax Adjustments to Combat Inflation, Introduces Higher Income Brackets

The IRS has released its 2026 tax updates under Revenue Procedure 2025-32, introducing new income limits to address inflation. A 2.7% inflation adjustment will shift tax brackets, preventing so-called 'bracket creep' where taxpayers face higher rates without real income growth. Single filers earning $50,000 will see their rate drop from 22% in 2025 to 12% in 2026.

Standard deductions have also been revised: $32,200 for joint filers, $24,150 for heads of household, and $16,100 for single filers. Seniors gain an additional $6,000 deduction under the One Big Beautiful Bill Act, though it phases out by 2028. The changes follow aggressive 7% and 5.4% adjustments in 2023-2024 to counter pandemic-era price surges.

In a separate move, the IRS announced an agency-wide furlough starting October, signaling operational shifts amid these structural tax reforms.