IRS updates could change how much you owe this year and next
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Tax season might still feel far away, but what’s happening now could change how much you owe—or get back—when you file.
With inflation still lingering and a new federal tax law in place, the IRS has made a series of updates that could shift how Americans calculate their taxable income.
Some of these changes might bring a bit of relief, while others could complicate things for those used to the same deductions and brackets year after year.
Whether you file early or wait until the last minute, it’s worth knowing how these adjustments could affect your bottom line.
The IRS announced a broad set of tax changes on Thursday that will impact both 2025 and 2026 returns.
The updates are driven by inflation adjustments and new provisions from the federal tax law enacted in July.
“Many taxpayers will see modest ‘relief’ simply because the deductions and thresholds move upward. Inflation will take less of a bite,” explained Tom O’Saben, director of tax content at the National Association of Tax Professionals.
In short, these revisions could mean more income falls into untaxed brackets and fewer people need to itemize.
One of the biggest updates is the increase in the standard deduction, which will allow more taxpayers to claim higher amounts without itemizing.
For the 2025 tax year, single filers will now have a standard deduction of $15,750, while married couples filing jointly can claim $31,500, and heads of household get $23,625.
he following year, those numbers will climb again—$16,100 for single filers, $32,200 for joint filers, and $24,150 for heads of household—reflecting the IRS’s annual inflation adjustment.
As O’Saben noted, these rising deductions “shift more income into the ‘zero bracket,’” effectively shielding a portion of earnings from taxation.
Source: cnbc / TikTok
Also read: Household savings ahead: Florida lifts sales tax on several staple items
The IRS also adjusted the income tax brackets for 2026 to account for inflation. The new structure keeps seven brackets but slightly increases the income thresholds for each rate.
For instance, individuals will pay 10% on the first $12,400 of taxable income, 12% on income over $12,400, and 37% on income greater than $640,600.
“The uneven increases are normal artifacts of the IRS’s inflation adjustment methodology—not a policy choice to favor one income level over another,” O’Saben clarified.
The goal is to prevent taxpayers from being pushed into higher tax brackets solely due to inflationary wage increases.
Also read: Could a $4,000 tax break be coming for Social Security recipients?
Low-income households will see additional help through a larger Earned Income Tax Credit (EITC) in 2026.
This refundable credit directly reduces the amount of tax owed and can even boost refunds for those with little or no tax liability.
The maximum credit for eligible filers with three or more children will increase to $8,231, up from $8,046 this year.
For many working families, that change could make a noticeable difference in annual refunds and disposable income.
Read next:
Do you think these tax adjustments will make a real difference for average taxpayers, or will inflation continue to cancel out most of the gains? Share your thoughts and experiences with this year’s tax changes in the comments below.
With inflation still lingering and a new federal tax law in place, the IRS has made a series of updates that could shift how Americans calculate their taxable income.
Some of these changes might bring a bit of relief, while others could complicate things for those used to the same deductions and brackets year after year.
Whether you file early or wait until the last minute, it’s worth knowing how these adjustments could affect your bottom line.
The IRS announced a broad set of tax changes on Thursday that will impact both 2025 and 2026 returns.
The updates are driven by inflation adjustments and new provisions from the federal tax law enacted in July.
“Many taxpayers will see modest ‘relief’ simply because the deductions and thresholds move upward. Inflation will take less of a bite,” explained Tom O’Saben, director of tax content at the National Association of Tax Professionals.
In short, these revisions could mean more income falls into untaxed brackets and fewer people need to itemize.
One of the biggest updates is the increase in the standard deduction, which will allow more taxpayers to claim higher amounts without itemizing.
For the 2025 tax year, single filers will now have a standard deduction of $15,750, while married couples filing jointly can claim $31,500, and heads of household get $23,625.
he following year, those numbers will climb again—$16,100 for single filers, $32,200 for joint filers, and $24,150 for heads of household—reflecting the IRS’s annual inflation adjustment.
As O’Saben noted, these rising deductions “shift more income into the ‘zero bracket,’” effectively shielding a portion of earnings from taxation.
Source: cnbc / TikTok
Also read: Household savings ahead: Florida lifts sales tax on several staple items
The IRS also adjusted the income tax brackets for 2026 to account for inflation. The new structure keeps seven brackets but slightly increases the income thresholds for each rate.
For instance, individuals will pay 10% on the first $12,400 of taxable income, 12% on income over $12,400, and 37% on income greater than $640,600.
“The uneven increases are normal artifacts of the IRS’s inflation adjustment methodology—not a policy choice to favor one income level over another,” O’Saben clarified.
The goal is to prevent taxpayers from being pushed into higher tax brackets solely due to inflationary wage increases.
Also read: Could a $4,000 tax break be coming for Social Security recipients?
Low-income households will see additional help through a larger Earned Income Tax Credit (EITC) in 2026.
This refundable credit directly reduces the amount of tax owed and can even boost refunds for those with little or no tax liability.
The maximum credit for eligible filers with three or more children will increase to $8,231, up from $8,046 this year.
For many working families, that change could make a noticeable difference in annual refunds and disposable income.
Read next:
- 9 tax breaks for people over 50 you might be missing
- What the proposed "senior bonus" tax break could mean for your retirement
