The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, maintains federal income tax rates between 10% and 37%. The key for tax planning is understanding your marginal tax rate—the rate applied to your next dollar of income after adjustments and deductions.
Here are the income thresholds for tax brackets in 2026:
- Single Filers:
- 12%: $12,401
- 22%: $50,401
- 24%: $105,701
- 32%: $201,776
- 35%: $256,226
- 37%: $640,601
- Head of Household:
- 12%: $17,701
- 22%: $67,451
- Married Filing Jointly:
- 12%: $24,801
- 22%: $100,801
- 24%: $211,401
- 32%: $403,551
- 35%: $512,451
- 37%: $768,701
- Married Filing Separately: Half the amounts of joint filers (except for the 37% bracket).
If your income is close to moving into a higher bracket, consider strategies such as accelerating deductible expenses to reduce taxable income. Note that the standard deduction remains high under OBBBA, so itemizing only benefits if total deductions exceed these amounts:
- Single: $16,100
- Head of Household: $24,150
- Joint Filers: $32,200
OBBBA also adjusts itemized deductions—some (like state and local tax deductions) offer greater benefits, while others (like charitable deductions) may be limited. Additionally, new deductions are available regardless of itemization, including those for qualified tips, overtime, senior taxpayers (65+), and qualified auto loan interest.
Plan Medical Expenses Wisely
If you plan to itemize deductions in 2026, consider accelerating medical expenses to exceed the 7.5% of your adjusted gross income (AGI) threshold for deductible medical costs. Deductible expenses include:
- Health insurance premiums
- Long-term care insurance premiums
- Medical, dental services, and prescriptions
- Mileage driven for healthcare
If your medical expenses are near the threshold, bunching expenses into 2026 can maximize deductions. Conversely, if you won’t itemize or your expenses are far below 7.5% of AGI, delaying expenses into 2027 might be better. Always prioritize health needs over tax strategies and consider insurance coverage timing.
Manage Investment Gains and Losses
Long-term capital gains rates remain unchanged under OBBBA at 0%, 15%, and 20%. These rates apply to assets held over one year, while short-term gains are taxed at ordinary income rates.
Long-term capital gains brackets start at these income levels:
- Singles: 15% at 545,501
- Head of Household: 15% at 579,601
- Joint Filers: 15% at 613,701
- Separate Filers: Half the joint filer amounts
If you expect significant capital gains, consider selling depreciated investments to generate losses that offset gains, avoiding the “wash sale” rule by waiting 31 days before repurchasing. Also, plan for the 3.8% Net Investment Income Tax (NIIT), which applies to modified AGI over 250,000 (joint filers).
Don’t Delay Your Tax Planning
Tax-saving opportunities diminish as the year ends. Midyear review gives you flexibility to implement strategies to reduce or defer taxes. For personalized guidance on these or other tax strategies, contact your tax professional.
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