Tax Brackets

Picture your taxable income filling a stack of buckets. The first bucket is taxed at 10%; once it is full, the next dollars spill into the 12% bucket, then the 22% bucket, and so on up. For a single filer in 2026, the first $12,400 of taxable income is taxed at 10%, income from $12,400 to $50,400 at 12%, and income from $50,400 to $105,700 at 22%. When income crosses into a higher bracket, only the part inside the new bracket pays the higher rate.

Two details trip people up. First, brackets apply to taxable income, what is left after the standard deduction or itemized deductions, so a single person with $60,000 of wages has $43,900 of taxable income in 2026 and sits in the 12% bracket. Second, the bracket your last dollar lands in is your marginal tax rate, while your overall share, the effective tax rate, is lower, because the deduction and the lower buckets pull the average down.

The IRS sets separate thresholds for each filing status, and the table below shows the three most common. For married couples filing jointly, every 2026 threshold up to the start of the 35% bracket is exactly double the single one, so two earners with similar incomes owe the same bracket tax married or single. The doubling stops at the top: the 37% rate starts at $640,600 for single filers but at $768,700 for joint filers. That gap, and fixed thresholds that don’t double, such as the $200,000 single and $250,000 joint trigger for the 3.8% net investment income tax, are where a marriage penalty can appear.

Head of household filers, usually single parents, get wider 10% and 12% brackets than single filers. Married filing separately uses the single thresholds until the 35% bracket, which ends at $384,350, half the joint figure.

Estates and trusts face far more compressed brackets. In 2026, income a trust keeps rather than distributes is taxed at 37% once it passes just $16,000, a big reason many trusts pay income out to beneficiaries, who are usually in lower brackets.

Bracket thresholds are indexed for inflation. Each fall the IRS publishes the next year’s figures in a revenue procedure; the 2026 tables came out in October 2025 in Rev. Proc. 2025-32. The law ties the adjustment to the chained consumer price index (C-CPI-U), with each increase rounded down. According to the Bureau of Labor Statistics, the chained index rose about 0.2 percentage point a year less than the regular CPI, on average, from 2001 to 2023, so thresholds grow a little more slowly than the familiar inflation figure.

The rates themselves change only when Congress acts. The current seven rates took effect in 2018 under the Tax Cuts and Jobs Act and were due to revert to higher rates after 2025. The One Big Beautiful Bill Act, signed July 4, 2025, made them permanent.

Not every threshold moves. The income levels at which Social Security benefits become taxable, and the $200,000 and $250,000 thresholds for the net investment income tax, are fixed in dollars, so inflation pulls more households past them each year.

Long-term capital gains and qualified dividends use a separate three-rate schedule: 0%, 15% and 20%. For 2026 the 0% rate covers taxable income up to $49,450 for single filers and $98,900 for joint filers, and the 20% rate applies above $545,500 and $613,700. Short-term gains, on assets held a year or less, are taxed at the ordinary rates.

The two schedules roughly line up. The 0% gains band ends just below the top of the 12% ordinary bracket ($50,400 single, $100,800 joint), so while total taxable income, gains included, stays within the 10% and 12% brackets, nearly all long-term gains are taxed at 0%. The 15% rate then runs deep into the 35% bracket before 20% applies.

The catch is stacking. Ordinary income fills the brackets first and gains sit on top, so the rate on a gain depends on your total taxable income, not on the size of the gain alone. A single retiree with $40,000 of ordinary taxable income and $20,000 of long-term gains has $9,450 of the gains taxed at 0% and the other $10,550 at 15%. Stacking is why tax-gain harvesting works best in years when ordinary income is low.

Because the rate changes only at a threshold, the most useful number is often the room left in your current bracket: the top of the bracket minus your taxable income. It tells you how much more income a year can absorb before the next rate applies. Brackets are only part of the picture, though. The taxation of Social Security, deductions and credits that phase out, and Medicare premium surcharges can make the real cost of the next dollar higher than the bracket shows, so test a move against the whole return.