New 2026 Tax Brackets: Why Some Workers Gain, Others Get Left Behind
Typically, U.S. tax laws change every year depending on inflation adjustments and Congress-led initiatives. When the One Big Beautiful Bill Act (OBBBA) passed into law in July 2025, it made many of the 2017 changes from the Tax Cuts and Jobs Act (TCJA) permanent and added some new rules.
Talking to George Dimov, founder and CEO of Dimov Tax, there are always new things to keep in mind when tax season rolls around, but here’s what taxpayers need to know about 2026 tax brackets specifically, and if they’ll be positively and negatively affected by any rule changes.
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Tax Brackets 2026: What’s New?
“Let us start with what did not happen,” Dimov stated. “The tax rates did not move. OBBBA locked in the seven tax brackets, which are 10 percent through 37 percent, and the IRS just increased the thresholds by about 2.7 percent for inflation.”
Inflation adjustments were created to ensure fairness by preventing inflation creep and protecting purchasing power. So, changes to tax brackets provide limited relief and largely maintain the status quo for the majority of American workers.
As such, most taxpayers will not win or lose much as a result. “For people with income, this saves them a little money compared to last year and it does not really change anyone’s life,” said Dimov. However, some sections of the population will benefit slightly more than others.
Who Wins?
Although the seven rates established by the TCJA — 10%, 12%, 22%, 24%, 32%, 35% and 37% — remain unchanged, the income thresholds for the two lowest groups increased by nearly 4%, while the upper brackets climbed by around 2.3%. This means that lower earners had a somewhat greater bracket change than higher earners, giving them slightly more relief.
As H&R Block reported, credits for Child Tax, Other Dependents and Adoption might help taxpayers knock off a few dollars on their tax liabilities. Additionally, the “No Tax on Overtime” and “No Tax on Tips” laws will provide relief to some individuals working in certain service occupations, per the IRS.
However, according to Dimov, “The people who really win or lose are affected by what OBBBA added on top. Senior citizens win outright. Anyone who is 65 years old or older gets a $6,000 tax deduction and couples get $12,000, which is added to the standard tax deduction as long as their income stays under $75,000 for single people or $150,000 for joint filers.”
Who Loses?
Self-employed individuals are still subject to the 15.3% self-employment tax, despite bracket creep relief. The impact of this rigid tax, which affects earned income regardless of tax brackets, is not lessened by any tax regulation changes.
“The people who lose quietly are the self-employed,” said Dimov. “Let us consider two people who each earn $70,000. The 67-year-old retiree adds that tax deduction to everything else and comes out a clear winner under the new rules."
“The freelancer who earns the $70,000 gets a few dollars from the tax bracket increase, then writes a check for roughly 15 percent in self-employment tax, which is outside the tax brackets and did not move,” Dimov added. “They have the income, but they are treated completely differently.”
Does a Raise Hurt Me at Tax Time?
Depending on the size of your pay increase, you might not see much of a difference at tax time — your deductions should increase along with your pay. You might move into the next tax rate as a result of your raise, but it’s not something the average American taxpayer should worry too much about.
“Does a pay raise ever hurt? Not with the tax brackets,” stated Dimov. “Only the dollars above each line get the tax rate, so more pay always means more money in your pocket. What hurts is crossing a line that's not a tax bracket.”
“If you go past $200,000 as a person or $250,000 as a couple, you trigger the extra Medicare and investment surtaxes, which have been frozen since 2013 and are not indexed,” Dimov said. “The tax bracket will not punish your pay raise.”
The 2026 tax bracket revisions do not fundamentally change the system, but they are significant. Knowing how marginal tax rates work — and which bracket your income falls into — can help you make better decisions before the end of the year.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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