2026 Tax Brackets and Standard Deduction Rise; Millions See Lower Effective Taxes
The IRS announced inflation adjustments for 2026, raising the standard deduction to $32,200 for married couples filing jointly and $16,100 for single filers. All seven federal tax brackets also shifted higher, potentially reducing the tax burden for millions of Americans filing returns in April 2027.
On October 9, 2025, the IRS released its annual inflation adjustments for tax year 2026—changes that will affect every individual US taxpayer. The standard deduction increases by roughly $700–$800, allowing more income to be excluded before federal taxes apply. Married couples filing jointly will benefit most, with their deduction climbing from $31,500 to $32,200.
Bracket Creep Relief and Senior Bonuses
Beyond the standard deduction, all seven federal income-tax brackets—10%, 12%, 22%, 24%, 32%, 35%, and 37%—shift higher to account for inflation, meaning your income can rise slightly without pushing you into a higher tax bracket. Additionally, the One Big Beautiful Bill (OBBB), signed in July 2025, introduced a temporary "senior bonus deduction." Taxpayers aged 65 and older can claim an additional deduction of up to $6,000 (single) or $12,000 (married filing jointly) for tax years 2025–2028, on top of the higher standard deduction.
The Earned Income Tax Credit (EITC) also expanded: the maximum credit rises to $8,231 for families with three or more qualifying children, up from $8,046 in 2025.
What This Means for Expats
If you are a foreign resident or expat working in the US or holding US income, these higher brackets and deductions reduce the federal tax hit on your 2026 earnings. When you file your 2026 tax return (due April 15, 2027), use the new standard deduction and bracket thresholds. Expats claiming the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC) should also note that phase-out ranges for certain credits and deductions have risen; review your eligibility before filing. Married couples filing jointly—especially those managing cross-border finances—benefit from the doubled standard deduction and wider joint brackets.
Sources
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