2026 Tax Brackets & Standard Deduction: What Changed
Executive Summary for the Taxpayer. The 2026 federal tax brackets remain 10%, 12%, 22%, 24%, 32%, 35%, and 37%, while the standard deduction rises to $16,100 for single and married-filing-separately taxpayers, $32,200 for married couples filing jointly, and $24,150 for heads of household. Rev. Proc. 2025-32; IRC § 63
Brick Taxes helps New Jersey taxpayers separate federal rules from state rules before filing. For questions about your 2026 tax position, call 732-540-1040.
Key Takeaways
- The 2026 tax brackets apply to taxable income after allowable deductions, not directly to gross wages. IRC §§ 1, 63
- The 2026 standard deduction is $16,100 single or married filing separately, $32,200 married filing jointly or qualifying surviving spouse, and $24,150 head of household. [Rev. Proc. 2025-32]
- Schedule 1-A allows temporary deductions for qualified tips, qualified overtime, certain auto-loan interest, and eligible seniors for tax years 2025 through 2028. OBBBA; IRS Schedule 1-A guidance
- “No tax on overtime” does not mean no tax on all overtime pay. The deduction generally covers only the FLSA-mandated overtime premium, or the half-time portion of time-and-a-half pay. [OBBBA; IRS Schedule 1-A guidance]
- New Jersey does not automatically follow every federal deduction. Federal and New Jersey taxable income must be modeled separately. New Jersey Division of Taxation
2026 Federal Tax Brackets
The following tables show federal marginal rates for taxable income in 2026. A marginal bracket applies only to the portion of taxable income within that bracket; reaching a higher bracket does not subject all income to the higher rate. [IRC § 1; Rev. Proc. 2025-32]
Single filers
| Tax rate | Taxable income |
|---|---|
| 10% | $0–$12,400 |
| 12% | $12,401–$50,400 |
| 22% | $50,401–$105,700 |
| 24% | $105,701–$201,775 |
| 32% | $201,776–$256,225 |
| 35% | $256,226–$640,600 |
| 37% | Over $640,600 |
Married filing jointly
| Tax rate | Taxable income |
|---|---|
| 10% | $0–$24,800 |
| 12% | $24,801–$100,800 |
| 22% | $100,801–$211,400 |
| 24% | $211,401–$403,550 |
| 32% | $403,551–$512,450 |
| 35% | $512,451–$768,700 |
| 37% | Over $768,700 |
Head of household
| Tax rate | Taxable income |
|---|---|
| 10% | $0–$17,700 |
| 12% | $17,701–$67,450 |
| 22% | $67,451–$105,700 |
| 24% | $105,701–$201,775 |
| 32% | $201,776–$256,200 |
| 35% | $256,201–$640,600 |
| 37% | Over $640,600 |
2026 Standard Deduction
The 2026 standard deduction amounts are set under Internal Revenue Code § 63 and indexed through Rev. Proc. 2025-32. [IRC § 63; Rev. Proc. 2025-32]
| Filing status | 2026 standard deduction |
|---|---|
| Single | $16,100 |
| Married filing separately | $16,100 |
| Married filing jointly | $32,200 |
| Qualifying surviving spouse | $32,200 |
| Head of household | $24,150 |
Taxpayers age 65 or older or who are blind may qualify for an additional standard deduction. For 2026, the additional amount is $1,650 per qualifying aged or blind individual, or $2,050 for an unmarried individual who is not a surviving spouse. [Rev. Proc. 2025-32]
A separate temporary senior bonus deduction under the One Big Beautiful Bill Act may provide an additional $6,000 deduction per eligible individual age 65 or older through 2028, subject to income limitations and filing requirements. That deduction is separate from the additional standard deduction for age or blindness. OBBBA; IRS senior deduction guidance
What Changed for 2026 vs. 2025
The standard deduction increased from the 2025 amounts of $15,750 for single and married filing separately, $31,500 for married filing jointly and surviving spouses, and $23,625 for heads of household. For 2026, those amounts increased by $350, $700, and $525, respectively. IRS 2026 inflation adjustment release
The seven federal individual rates remain 10% through 37%, but the taxable-income thresholds are adjusted for inflation. [Rev. Proc. 2025-32] The 2026 figures apply to the 2026 tax year, with most individual returns filed in 2027. [IRS 2026 inflation adjustment release]
Schedule 1-A is not a deduction that begins only in 2026. It is a temporary OBBBA form covering tax years 2025 through 2028, so 2026 is the second tax year in which eligible taxpayers may claim these additional deductions. [IRS Schedule 1-A guidance]
Schedule 1-A: Tips, Overtime, Auto Loans, and Seniors
Schedule 1-A carries several temporary additional deductions to Form 1040. These deductions generally reduce federal income subject to tax, but they do not erase the underlying reporting obligations. [IRS Schedule 1-A guidance]
Qualified tips
Eligible taxpayers may deduct up to $25,000 of qualified tips per return, subject to a phaseout above $150,000 of MAGI for single filers and $300,000 for married filing jointly. [OBBBA; IRS Schedule 1-A guidance]
Tips must still be properly reported as income. Social Security and Medicare taxes, commonly called FICA, continue to apply to tip wages; this is an income-tax deduction, not a payroll-tax exemption. [IRC §§ 3101, 3111, 3121; IRS Schedule 1-A guidance]
Qualified overtime
The 2026 overtime deduction is capped at $12,500 for single filers and $25,000 for married filing jointly, with phaseouts above $150,000 and $300,000 of MAGI, respectively. [OBBBA; IRS Schedule 1-A guidance]
The critical distinction: the deduction is generally limited to the FLSA-mandated overtime premium, not total overtime wages. If an employee earns $20 per hour, the time-and-a-half overtime rate is $30 per hour; generally, only the additional $10 premium is the qualified overtime amount, not the full $30. [Fair Labor Standards Act; IRS Schedule 1-A guidance]
FICA still applies to overtime wages, including the qualified premium. The deduction reduces federal income tax exposure but does not remove Social Security or Medicare withholding. [IRC §§ 3101, 3111, 3121]
Brick Taxes can review wage statements and employer overtime records before filing. Call 732-540-1040 if your W-2 does not clearly identify qualified tips or overtime.
Other Schedule 1-A deductions
Schedule 1-A also houses the following temporary provisions:
- A deduction for qualifying passenger-vehicle loan interest, subject to vehicle, loan, use, and income restrictions. [OBBBA; IRS Schedule 1-A guidance]
- The temporary senior deduction for eligible taxpayers age 65 or older. [OBBBA; IRS senior deduction guidance]
- The qualified tips and overtime deductions described above. [OBBBA; IRS Schedule 1-A guidance]
These provisions currently expire after 2028. Taxpayers should confirm the final form and instructions for the year being filed before relying on any deduction. [IRS Schedule 1-A guidance]
New Jersey Treatment Is Separate
New Jersey does not conform to every federal deduction or federal definition of taxable income. New Jersey generally does not use the federal standard deduction in the same manner, and federal Schedule 1-A deductions do not automatically reduce New Jersey taxable income. New Jersey Division of Taxation
For a New Jersey taxpayer receiving tips or overtime:
- Report the income under the applicable federal rules. [IRC §§ 61, 6051]
- Determine whether a federal Schedule 1-A deduction is available. [OBBBA; IRS Schedule 1-A guidance]
- Calculate New Jersey income using New Jersey forms and instructions. [New Jersey Division of Taxation]
- Do not assume that the federal “no tax on tips” or “no tax on overtime” treatment applies to the New Jersey return. [New Jersey Division of Taxation]
New Jersey homeowners should also compare itemizing with the federal standard deduction because the temporary SALT rules may affect the federal analysis. See Brick Taxes’ 2026 Tri-State tax law coverage. Taxpayers claiming the Earned Income Tax Credit can review the 2026 refund and EITC timing guide.
Common Questions About 2026 Tax Brackets
What are the 2026 tax brackets?
The 2026 federal rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The income thresholds differ by filing status, and the rates apply to taxable income rather than gross income. [IRC § 1; Rev. Proc. 2025-32]
What is the standard deduction for 2026?
The standard deduction is $16,100 for single and married filing separately, $32,200 for married filing jointly and surviving spouses, and $24,150 for heads of household. [Rev. Proc. 2025-32]
Do I still pay taxes on tips in 2026?
Tips remain reportable income, and FICA continues to apply to tip wages. Eligible taxpayers may claim a federal deduction for up to $25,000 of qualified tips, subject to the Schedule 1-A rules and MAGI phaseout. [IRC §§ 61, 3101, 3111; IRS Schedule 1-A guidance]
Is the Schedule 1-A overtime deduction on all overtime pay?
No. The key limitation is that qualified overtime generally means the FLSA-mandated overtime premium, or the half-time portion of time-and-a-half pay, rather than total overtime compensation. [Fair Labor Standards Act; IRS Schedule 1-A guidance]
Do the new deductions apply to New Jersey taxes?
Not automatically. New Jersey has its own tax base, deductions, and filing rules, so taxpayers must calculate federal and New Jersey liability separately. [New Jersey Division of Taxation]
Federal and State Filing Review
The correct filing strategy depends on filing status, taxable income, MAGI, age, tip or overtime records, itemized deductions, and New Jersey-specific treatment. Taxpayers should retain W-2s, employer wage detail, tip records, loan statements, and documentation supporting any Schedule 1-A claim. [IRS Schedule 1-A guidance]
Brick Taxes LLC provides federal and state tax preparation, tax planning, and IRS representation for individuals, homeowners, W-2 employees, service-industry workers, and small businesses. Contact Brick Taxes LLC at 732-540-1040, info@bricktaxes.com, or bricktaxes.com; office address: 88 Queen Ann Rd, Brick, NJ.