IRS Releases 2026 Tax Brackets, Contribution Limits, Other Tax Updates

The IRS recently announced adjustments to marginal tax rates, retirement plan contribution limits, and other provisions that will be helpful for financial planning in the new year.

2025 0BBBA updates

While most of the changes below apply to tax year 2026, the federal tax and spending bill known as the One Big Beautiful Bill Act (OBBBA) made some important changes that apply to tax year 2025.

Notably, the standard deduction for 2025 increased to $15,750 for single tax filers and $31,500 for married couples filing jointly.

The OBBBA also established a new tax deduction for taxpayers who are at least 65 years old. For tax years 2025 through 2028, eligible seniors can deduct an additional $6,000 from their taxable income. The deduction phases out for individuals with modified adjusted gross income over $75,000.

2026 retirement plan contribution limits

In the new year, employees will be able to set aside more money in defined contribution retirement accounts such as 401(k), 403(b), and 457 plans.

The maximum amount a person can contribute to those plans is $24,500 for 2026, an increase of $1,000 from 2025. The catch-up contribution limit for most employees who are 50 or older will increase to $8,000.

Under the SECURE 2.0 Act, workers who are 60, 61, 62, or 63 have a higher catch-up contribution limit. That limit remains unchanged for 2026 at $11,250.

For individual retirement accounts (IRAs), the annual contribution limit will increase to $7,500 in 2026 and the catch-up contribution limit will be $1,100.

2026 HSA/FSA contribution limits

The amount of money workers can contribute to medical savings accounts also will increase in 2026.

• HSA: Individuals enrolled in a high deductible health plan (HDHP) with a health savings account (HSA) will be able to contribute up to $4,400, and those with family coverage will be able to save a maximum of $8,750.
• FSA: For workers who don’t have an HDHP with an HSA and instead use a flexible spending account (FSA), the maximum contribution for 2026 is $3,400. For plans that allow unused balances to roll over, the maximum amount that can be rolled over will increase to $680.

2026 tax rates

Below are updated marginal tax rates for single taxpayers and married couples filing jointly. Visit the IRS website for more tax tables and additional details.

Note that since these changes are for tax year 2026, they will generally apply to tax returns filed in 2027; 2025 tax rates will apply to returns filed in 2026.

• 37% for incomes over $640,600 ($768,700 for married couples filing jointly)
• 35% for incomes over $256,225 ($512,450 for married couples filing jointly)
• 32% for incomes over $201,775 ($403,550 for married couples filing jointly)
• 24% for incomes over $105,700 ($211,400 for married couples filing jointly)
• 22% for incomes over $50,400 ($100,800 for married couples filing jointly)
• 12% for incomes over $12,400 ($24,800 for married couples filing jointly)
• 10% for incomes of $12,400 or less ($24,800 for married couples filing jointly)

2026 standard deduction

The standard deduction for 2026 will increase to $16,100 for single tax filers and $32,200 for married couples filing jointly.

Taxpayers who are 65 or older can take an additional standard deduction, which is also adjusted for inflation. For tax year 2026, that amount is $2,050 for single taxpayers and $1,650 for married taxpayers or surviving spouses.

Visit the IRS website for more information on these and other tax changes.

PERA benefits and taxes

Colorado PERA benefits are subject to federal income tax, as well as applicable state and local taxes. PERA retirees who would like to update their tax withholding can do so by logging in to their secure member account or completing a paper Form W-4P.

Retirees and benefit recipients can expect to receive their 1099-R tax forms for tax year 2025 in January 2026.

Learn more at copera.org/taxes-on-benefits.