New Tax Rates, Standard Deduction + More for 2026

We haven't even reached 2026, let alone the 2025 tax filing season.

But if you're among the people who understand the virtues (and financial rewards) of tax planning, you'll be happy to learn that the IRS just disclosed a treasure trove of important 2026 tax information.

The Tea

Every October, the IRS disseminates a wide variety of tax data that's routinely changed from one year to the next. This information governs how much tax you pay on your earnings, on your investments, on your gifts to others, and more.

Technically speaking, none of this information applies to money you'll earn in 2025. But given that this information will be awfully darn pertinent in just a matter of months, if nothing else, you'll want to save these 2026 tax figures for future use.

The Take

Today, we're going to quickly go over four of the most important tax updates for 2026:

• Federal income tax brackets
• Capital gains taxes
• Gift taxes
• The standard deduction

We'll list the nuts 'n' bolts—the most important aspects of these taxes and deductions. But if you want to learn more about any one of them, we'll point you to fuller stories that dig into how they work and some of the finer details and caveats.

Federal Income Tax Brackets

Federal tax rates haven't changed from 2025 to 2026, since they're not impacted by inflation from one year to the next. For both years, the seven federal tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

What's changed for 2026 (and tends to change from one year to the next) are the income brackets determining your rate.

The following table includes each tax rate, the 2026 taxable income range for each rate, and how to calculate taxes for that bracket. I've also listed the 2025 taxable income range (for comparison's sake).

A quick reminder: The U.S. tax code uses marginal tax rates, which basically means that only the income that falls within the taxable income range for each tax bracket is taxed at that bracket's corresponding tax rate. Income below your marginal tax bracket is taxed at lower rates according to the income ranges for any lower tax bracket. As a result, marginal tax rates reduce income taxes for almost everyone.

Here's an example to help you better understand marginal tax rates:

Nicholas is a single filer and has $60,000 of taxable income for the 2025 tax year. That puts him in the 22% tax bracket. However, he doesn't owe 22% of $60,000, which would be $13,200 ($60,000 x .22 = $13,200). He actually owes less.

• The first $12,400 of Nicholas's income is taxed at the 10% marginal tax rate, which results in $1,240 of tax.
• The next $38,000 of his income (i.e., from $12,401 to $50,400) is taxed at the 12% marginal tax rate, which adds $4,560 of tax.
• And, finally, the remaining $9,600 of Nicholas's income (i.e., from $50,401 to $60,000) is taxed at the 22% rate, which comes to $2,112 of tax.

As a result, Nicholas's total tax, when all of the separate amounts are added up, comes to $7,912, which is $5,288 less than the $13,200 tax if a flat 22% applied to all his income.

You can learn more in our primer on federal income tax brackets.

Capital Gains Tax

If you sell stock, cryptocurrency, real estate, precious metals, or any other capital asset for a profit, you've recorded a "capital gain" … and that means you'll generally have to pay a capital gains tax.

The tax is typically paid when you file your federal income tax return for the year the asset is sold. However, the capital gains tax rate you'll pay may vary depending on the timing of your purchase and sale.

Generally speaking, if you sell a capital asset for a profit, you have a long-term capital gain if you held the asset for more than one year before selling it. On the other hand, you have a short-term capital gain if you held the asset for one year or less.

Short-term capital gains taxes are easy, but they're no picnic—you'll pay taxes at the rate dictated by your federal income tax bracket (shown above).

Long-term capital gains taxes are different, but simpler and more favorable. You'll be taxed at a rate of either 0%, 15%, or 20%, depending on your taxable income.

You can learn more in our primer on capital gains taxes.

Gift Taxes

The federal gift tax generally applies to the transfer of property (including money) from one person to another if nothing, or something of lesser value, is received in return. The tax is paid by the person giving the gift—not by the recipient.

When measuring the value of property for gift tax purposes, use the property's fair market value (FMV) on the date the gift is made. The IRS defines FMV as "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts."

The federal gift tax rates are relatively high—they start at 18% and go all the way up to 40%. Those usually don't change from one year to the next.

Young and the Invested Tip: Gifts you receive are also exempt from federal income tax.

The numbers that tend to change are the annual gift tax exclusion and lifetime gift tax exemption, which can help you to avoid paying gift tax.

The annual gift tax exclusion applies per person. So, if you're married, you and your spouse can give a combined total of $38,000 to a family member or friend in 2026 (the same as 2025). The exclusion also applies on a per recipient basis. So, in 2026, you can give up to $19,000—or up to $38,000 for a married couple—to as many people as you like without having to pay any federal gift tax ($19,000 and $38,000, respectively, for 2025).

Since it's an annual limit, all gifts must be made by the end of the calendar year for the exclusion to apply (e.g., by Dec. 31, 2026, for the 2026 exclusion to apply).

Any gifts exceeding the annual gift tax exclusion must be reported to the IRS on a federal gift tax return (Form 709). However, that doesn't necessarily mean you will owe any tax for those gifts. 

You'll only owe federal gift taxes if the combined total of all gifts reported on Form 709 during your life exceeds the lifetime gift tax exemption. For 2026, the lifetime gift tax exemption is $15 million, and that's doubled for married couples (so, $30 million in 2026).

Obviously, with exemption amounts so high, most Americans won't ever have to worry about paying the federal gift tax. Generally, this is a tax paid by the rich.

You can learn more, and check out examples to better understand the concept, in our primer on gift taxes.

The Standard Deduction

Every year, as you file your federal income tax return, you have an important decision to make: itemize, or take the standard deduction. You can only pick one, but at least you can select the option that cuts your tax bill the most.

Standard deduction amounts are adjusted each year to account for inflation, which helps taxpayers by increasing their deduction nearly every year. 

Your standard deduction for the year primarily depends on your filing status, but it can also be impacted by your age, whether or not you're a dependent, and even your vision.

For the 2026 tax year, the basic standard deduction based on your filing status will be as follows:

Dependents

The basic standard deduction is capped for people who can be claimed as a dependent on someone else's tax return. For 2026, a dependent's basic standard deduction will be limited to the greater of:

• $1,350
• Your earned income plus $450 (but not more than the applicable basic standard deduction amount)

Earned income includes salaries, wages, tips, professional fees, and other compensation for work. It also includes any part of a taxable scholarship or fellowship grant.

Additional Standard Deduction

Anyone who's at least 65 years old or legally blind at the end of next year will be able to claim the following additional standard deduction amount for the 2026 tax year:

• $1,650 for married couples filing jointly, married taxpayers filing separately, and surviving spouses
• $2,050 for single and head-of-household filers

For married couples who file a joint tax return, both spouses will get an additional standard deduction for being at least 65 years old or blind. If you or your spouse is both 65 or older and blind, then the additional deduction for that person will be doubled.

If you're married but file a separate return, your spouse will be eligible for the additional standard deduction on your return only if he or she has no income, isn't filing a return, and can't be claimed as a dependent on someone else's tax return for the tax year. The additional deduction will also be doubled for separate filers for either qualifying spouse who is both 65 or older and blind.

You can learn more in our primer on the standard deduction.

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As always, we appreciate you spending your time to check out The Weekend Tea! We hope to see you again next week!

Riley & Kyle

Young and the Invested

Disclaimer: This article does not constitute individualized investment advice. These securities appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

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