What’s Changing and Why It Matters
The IRS has released new 2026 tax brackets and rules that will affect how much you owe—and what you can keep—in the coming year.
These updates reflect normal inflation adjustments plus new laws passed under the One Big Beautiful Bill (OBBB). The result: slightly lower effective tax rates for most households and several new deductions designed to benefit working Americans, retirees, and small business owners.
This guide highlights what’s changing, who it affects, and the key steps your advisor will help you take before the end of 2025.
1. New Tax Brackets and Deductions
Slightly higher thresholds mean slightly lower taxes for many households.
The IRS adjusts tax brackets each year for inflation. In 2026, the income thresholds for most tax rates rise by about 3–4%, meaning a little more of your income will be taxed at lower rates.
| Tax Rate | Single Filers (2026) | Married Filing Jointly (2026) | What This Means for You |
| 10% | $0 – $12,400 | $0–$24,800 | The lowest bracket expands slightly, helping all taxpayers. |
| 12% | $12,401 – $50,400 | $24,801–$100,800 | More income will stay in this moderate bracket. |
| 22% | $50,401 – $105,700 | $100,801–$211,400 | Minor adjustments, good for middle-income households. |
| 24% and above | Higher brackets adjusted slightly upward | Small relief for higher earners; timing income may matter. |
Standard Deduction (2026)
- Single: $16,100
- Married Filing Jointly: $32,200
- Head of Household: $24,150
- Age 65 and over: +$6,000 per person
What to Expect: Most families will see modest tax savings simply from these bracket adjustments and the larger standard deduction.
2. New Deductions for Workers and Retirees
Several temporary deductions are now available for 2025–2028.
These new deductions are designed to reduce taxes for people who earn tips, work overtime, drive for a living, or are age 65 and older.
| New Deduction | What It Covers | How It Helps You |
| No Tax on Tips | Up to $25,000 of qualifying tip income | Workers in “tipped” professions may pay no federal tax on a portion of their tips. |
| Overtime Deduction | Up to $12,500 (single) / $25,000 (joint) | If you regularly work overtime, you may now deduct part of that extra pay. |
| Vehicle Loan Interest | Interest on new, U.S.-made vehicles (up to $10,000) | If you finance a car purchase, some of the loan interest may now be deductible. |
| Senior Bonus Deduction | $6,000 per person age 65+ | Retirees may see lower taxable income, helping offset required distributions (RMDs). |
Journey Advisors are already reviewing eligibility for these deductions and will let you know if any apply to your 2026 return.
3. Updates Affecting Homeowners, Business Owners, and Investors
| Area | What Changed | What to Do |
| State & Local Tax (SALT) Deduction | The cap rises from $10,000 to $40,000. | If you live in a high-tax state, you may be able to deduct more of what you pay in state taxes. |
| Business Income (QBI) | The 20% small-business income deduction is now permanent. | Business owners and independent professionals should review their entity structure with their advisor. |
| Bonus Depreciation | Businesses can now again deduct 100% of qualified equipment purchases. | If you own a business, large purchases may provide full write-offs in 2026. |
| Estate Tax Exemption | Increases to $15 million per person. | High-net-worth families can gift or transfer more wealth tax-free. |
If you own a business or significant property, these changes can meaningfully impact your long-term tax and estate plan.
4. Other 2026 Adjustments to Be Aware Of
| Category | Change | Why It Matters |
| Alternative Minimum Tax (AMT) | Thresholds increased | Fewer families will be affected by AMT. |
| Child Tax Credit | Remains $2,000 per child | No change—plan contributions as before. |
| Energy Credits | Certain clean energy credits reduced | Check with your advisor before investing in solar or EV upgrades. |
| Refunds | IRS will phase out paper refund checks | Make sure your direct-deposit info is current for 2026 filings. |
5. What to Do Before December 31, 2025
- Review year-end tax projections with your Journey advisor to understand how the new brackets affect you.
- Consider timing big purchases (e.g., business equipment or vehicles) before year-end to capture new deductions.
- If you’re age 65 or older, confirm your eligibility for the new $6,000 senior deduction.
- High state-tax residents: explore itemizing again under the higher $40K SALT cap.
- Confirm your bank info with the IRS for electronic refunds (paper checks will end in 2025).
6. What’s Still Pending
The IRS will provide more details in late 2025, including:
- A full list of which occupations qualify for the “no tax on tips” rule.
- How employers will report eligible overtime pay.
- How state tax systems will handle the new deductions.
Your Journey advisor will keep you informed as these rules are finalized.
7. The Bottom Line
Tax changes can seem complicated, but they often create opportunities. The 2026 updates include expanded deductions, higher thresholds, and several new benefits that can reduce your overall tax bill, if planned for in advance.
Your Journey advisor is already reviewing your 2025–2026 plan to ensure you benefit from these updates.
Reach out before year-end to review your personalized tax strategy for 2026.
This material is distributed for informational purposes only. Investment Advisory services offered through Journey Strategic Wealth, a registered investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). The views expressed are for informational purposes only and do not take into account any individual’s personal, financial, or tax considerations. Opinions expressed are subject to change without notice and are not intended as investment advice. Past performance is no guarantee of future results. Please see Journey Strategic Wealth’s Form ADV Part 2A and Form CRS for additional information.