The IRS just announced new federal tax brackets for 2026. What are tax brackets and what do they mean for you? Here's a good summary based on an article by Dawn Papandrea in SoFi's On The Money.
The U.S. has a progressive tax system, meaning your income isn’t taxed at one rate. Instead, you pay tax on layers known as brackets. As your income goes up and crosses various thresholds, the tax rate on each layer of income rises. When you look up which bracket your taxable income falls into, the corresponding tax rate isn’t the tax rate you pay on all your income. These are the marginal tax rates for each income range, meaning that tax rate only applies to the portion of your income that’s not taxed at lower rates. The withholding from your paycheck reflects this, estimating your average tax rate. That average tax rate is also known as your effective tax rate
2026 tax brackets for a single person
10% for income less than $12,400
12% for income between $12,401 and $50,400
22% for income between $50,401 and $105,700
24% for income between 105,701 and $201,775
32% for income between $201,776 and $256,225
35% for income between $256,226 and $640,600
37% for income over $640,601
2026 tax brackets for a married couple
10% for income less than $24,800
12% for income between $24,801 and $100,800
22% for income between $100,801 and $211,400
24% for income between 211,401 and $403,550
32% for income between $403,551 and $512,450
35% for income between $512,451 and $768,700
37% for income over $768,701
This is how it works. Let’s say you’re married and you and your spouse are filing together with $105,000 in taxable income in 2026. Taxable income is what remains after your various tax deductions, such as the itemized or standard deduction, contributions to an IRA and for 2026, 2027 and 2028 the special deductions for seniors, tips, overtime and car interest.
The $105,000 puts you in the 22% bracket, because, as the table above shows, you make over $100,800 but less than $211,400. That means you only owe 22% on income over $100,800. In other words:
• The first $24,800 is taxed at 10% = $2,480
• The next $76,000 ($100,800 – $24,800) is taxed at 12% = $9,120
• And then the remaining $4,200 ($105,000 – $100,800) is taxed at 22% = $925
In total, you and your spouse owe $12,525. ($2,480+$9,120+$925)
This is where your average tax rate comes in. That’s the percentage of all your income you pay in taxes. So in this example, since you and your spouse owe $12,525 of the $105,000, your effective tax rate would be 11.9%.
Once you know your effective federal tax rate you should check your federal withholding and make sure it is at least as much as your effective rate and probably a little more, just to give you a cushion for any unexpected changes in the tax law. For example, if that $105,000 is paid out in monthly paychecks, you and your spouse should have a combined federal withholding of at least $1050 per month ($105,000/12 = $8750 x .12 =$1050).
There is a calculator on the IRS website that helps you determine how much should be withheld for taxes based on your income and the frequency of your pay (weekly, biweekly, monthly) but it has not been updated yet to reflect the new tax brackets and it is not expected to be updated until the government shutdown is over.
States also have progressive tax systems that operate in the same way as the federal system. They have varying numbers of brackets (for example, California and New York have nine brackets) but most rely on an effective tax rate to determine how much you need to pay. Most states also have online calculators that can help you figure out your effective tax rate so that you can make sure your state withholding is sufficient.
A big tax bill when come April 15 is not something anyone wants to deal with, so make sure you are having sufficient funds withheld to avoid that.
The U.S. has a progressive tax system, meaning your income isn’t taxed at one rate. Instead, you pay tax on layers known as brackets. As your income goes up and crosses various thresholds, the tax rate on each layer of income rises. When you look up which bracket your taxable income falls into, the corresponding tax rate isn’t the tax rate you pay on all your income. These are the marginal tax rates for each income range, meaning that tax rate only applies to the portion of your income that’s not taxed at lower rates. The withholding from your paycheck reflects this, estimating your average tax rate. That average tax rate is also known as your effective tax rate
2026 tax brackets for a single person
10% for income less than $12,400
12% for income between $12,401 and $50,400
22% for income between $50,401 and $105,700
24% for income between 105,701 and $201,775
32% for income between $201,776 and $256,225
35% for income between $256,226 and $640,600
37% for income over $640,601
2026 tax brackets for a married couple
10% for income less than $24,800
12% for income between $24,801 and $100,800
22% for income between $100,801 and $211,400
24% for income between 211,401 and $403,550
32% for income between $403,551 and $512,450
35% for income between $512,451 and $768,700
37% for income over $768,701
This is how it works. Let’s say you’re married and you and your spouse are filing together with $105,000 in taxable income in 2026. Taxable income is what remains after your various tax deductions, such as the itemized or standard deduction, contributions to an IRA and for 2026, 2027 and 2028 the special deductions for seniors, tips, overtime and car interest.
The $105,000 puts you in the 22% bracket, because, as the table above shows, you make over $100,800 but less than $211,400. That means you only owe 22% on income over $100,800. In other words:
• The first $24,800 is taxed at 10% = $2,480
• The next $76,000 ($100,800 – $24,800) is taxed at 12% = $9,120
• And then the remaining $4,200 ($105,000 – $100,800) is taxed at 22% = $925
In total, you and your spouse owe $12,525. ($2,480+$9,120+$925)
This is where your average tax rate comes in. That’s the percentage of all your income you pay in taxes. So in this example, since you and your spouse owe $12,525 of the $105,000, your effective tax rate would be 11.9%.
Once you know your effective federal tax rate you should check your federal withholding and make sure it is at least as much as your effective rate and probably a little more, just to give you a cushion for any unexpected changes in the tax law. For example, if that $105,000 is paid out in monthly paychecks, you and your spouse should have a combined federal withholding of at least $1050 per month ($105,000/12 = $8750 x .12 =$1050).
There is a calculator on the IRS website that helps you determine how much should be withheld for taxes based on your income and the frequency of your pay (weekly, biweekly, monthly) but it has not been updated yet to reflect the new tax brackets and it is not expected to be updated until the government shutdown is over.
States also have progressive tax systems that operate in the same way as the federal system. They have varying numbers of brackets (for example, California and New York have nine brackets) but most rely on an effective tax rate to determine how much you need to pay. Most states also have online calculators that can help you figure out your effective tax rate so that you can make sure your state withholding is sufficient.
A big tax bill when come April 15 is not something anyone wants to deal with, so make sure you are having sufficient funds withheld to avoid that.
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