The IRS has set the 2026 tax brackets and standard deductions, keeping seven rates in place while shifting the income thresholds upward to account for inflation and to reflect changes enacted in the One Big Beautiful Bill Act, meaning many paychecks will see modest relief in 2026 and the top rate still bites only above very high incomes. For most households, the standard deduction rises again, which will reduce taxable income before the brackets even apply, and high earners will continue to face a 37% top rate but at slightly higher income thresholds than in 2025.The 2026 bracketsFor 2026, the tax rates remain 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with inflation-adjusted thresholds that determine how much income is taxed at each rate rather than taxing all income at a single rate.Single filers reach the 12% bracket above $12,400, 22% above $50,400, 24% above $105,700, 32% above $201,775, 35% above $256,225, and the top 37% rate above $640,600 in 2026. The corresponding married filing jointly thresholds are $24,800, $100,800, $211,400, $403,550, $512,450, and $768,700.These thresholds rise to reduce bracket creep as prices and wages move, and press coverage pegs the broad pattern as roughly 4% increases for lower brackets and around 2% to 3% at higher levels compared with 2025, a common feature of the IRS’ annual inflation process.Standard deduction changesThe standard deduction for 2026 is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household, reflecting both routine inflation indexing and specific changes embedded in the new law.The law also bumped the 2025 standard deduction to $15,750 for single filers and $31,500 for joint filers—an increase that carries into the 2026 baseline—before the new 2026 figures take effect on returns filed in 2027What it means for the average householdMost workers will see a small reduction in taxable income due to the higher standard deduction, and more of their pay will be taxed in lower brackets thanks to the shifted thresholds, which together help offset inflation’s push into higher nominal incomes.The changes are designed to keep taxpayers from drifting into higher rates without real after-inflation income gains, so annual bracket adjustments typically translate into a modest paycheck boost or a slightly smaller tax bill at filing time.What it means for high earnersThe top marginal rate stays at 37% but begins at higher income levels—above $640,600 for single filers and $768,700 for joint filers—so high earners also benefit from bracket shifts, albeit modestly compared with their overall liability.Beyond ordinary income, OBBBA made permanent several TCJA-era features that matter to affluent taxpayers, and it extended and reshaped other provisions, interacting with estate planning and high-bracket itemized deduction limits in ways that call for fresh planning.Estate and wealth-transfer contextOBBBA permanently sets the federal estate and gift tax exemption at $15 million per person beginning in 2026, indexed to inflation, a significant change from the prior scheduled reversion that stabilizes long-horizon wealth planning for families with large estates.That permanence creates durable room for transfers into trusts and other structures while aligning with the 2026 bracket landscape, making 2026 a key year to revisit estate strategies and potential gifting windows.‘Sugar high’ riskFortune previously detailed how OBBBA cements TCJA-era individual rate architecture and boosts the standard deduction in 2025, framing the law’s household-level impact and distributional tilt as favoring higher earners according to independent modeling cited in our reporting.Budget watchdogs have highlighted broader fiscal implications and the bill’s “sugar high” risk, linking tax cuts and spending choices to debt trajectories and future policy trade-offs that shape the 2026 tax bracket environment.For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Fortune.com