IRS Announces 2026 Tax Bracket Adjustments with Modest Inflationary Increases

The Internal Revenue Service revealed updated tax brackets for the 2026 fiscal year, implementing a 2.3% adjustment to account for inflation. This marks a slightly smaller increase than prior years' adjustments, continuing the trend of indexing tax thresholds to wage growth.

Legislative changes under the "One Big, Beautiful Bill" have retroactively raised standard deductions for 2025 filings, with a projected 2.2% increase for 2026. Parallel adjustments were made to key tax credits including the Earned Income Tax Credit and Estate Tax Credit.

These incremental changes aim to maintain tax burden proportionality—most wage earners receiving raises below the adjustment threshold won't face higher marginal rates. The modifications reflect ongoing efforts to prevent bracket creep from eroding purchasing power.