IRS 2026 Changes: Bigger Deductions Mean More Money in Your Pocket

Unfortunately, many people only think about paying and learning about their taxes as a negative thing. However, ongoing changes at the IRS for the tax year 2026 (which will be filed in 2027) mean that informed citizens could get substantially more money in their pocket or bank account.

Why the IRS's 2026 Rule Changes Could Put Extra Cash in Your Pocket

When Congress passed the One Big Beautiful Bill Act, and it was signed into law, it introduced several substantial changes. Some of those will apply fully or see futher adjustments in the 2026 tax year, making it even easier for people to take home more money.

As noted on the IRS website, the standard deduction, which you subtract from your income before calculating your taxes, will increase in 2026. For married couples who file jointly, it will rise from $31,500 in 2025 to $32,200. Singles will see it go up from $15,750 to $16,100, and heads of household from $23,625 to $24,150. For someone in the 22% tax bracket, each additional $700 that is deducted will save them $154 in taxes.

Speaking of tax brackets, the income ranges for each have been raised in 2026 by roughly 2.7% on average due to inflation. According to the Tax Foundation, married couples filing jointly needed income over $751,600 in 2025 to hit the top tax rate of 37%. That threshold has risen to $768,700 for 2026.

Homeowners in high-tax states also benefit from the State and Local Tax (SALT) deduction cap rising from $40,000 to $40,400. Though that isn't a massive rise, this could result in tax savings as high as $400 to $800 for those who are near the cap, depending on their tax bracket. However, taxpayers need to know that the SALT cap drops significantly once they reach a certain threshold of earnings. At the lowest, the cap will drop to just $10,000 for higher earners who make more than $600,000 in the affected states.

For older Americans who rely on Social Security, there is positive news about how much money they will receive in 2026. According to the Social Security Administration website, retirees will get a 2.8% cost-of-living adjustment (COLA) up that began in January. That will raise the average monthly payment by $56 from $2,015 to $2,071. Additionally, the wage cap that people can't surprass if they want to qualify for Social Security rose to $184,500 from $176,100 the previous year.