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2026 Tax Numbers Guide

2026 Tax Numbers — What Changed & What It Means For You

Inflation at the grocery store

A straightforward guide to federal tax brackets, retirement contribution limits, and changes you should know about this year. Designed for teachers, public employees, and everyone planning their financial future.

These are the key changes from 2025 that affect your taxes and retirement planning.

$32,200
Standard Deduction
(Married, Joint)
$24,500
401(k) Limit
(up $1,000)
$7,500
IRA Limit
(unchanged)
$184,500
Social Security
Wage Base

Standard Deduction Increases

The IRS adjusts these amounts annually for inflation. For 2026:

2025 Standard Deductions

Single $15,750
Married (Joint) $31,500
Head of Household $23,625

2026 Standard Deductions

Single $16,100
Married (Joint) $32,200
Head of Household $24,150

What This Means

A higher standard deduction means less of your income is subject to tax. Unless your itemized deductions (mortgage interest, property taxes, charitable donations) exceed these amounts, you'll use the standard deduction.

Retirement Contribution Limits

  • 401(k) / 403(b) / 457(b): $24,500 (up from $23,500)
  • Catch-up contribution (age 50+): $8,000
  • Special "super catch-up" (age 60–63): $11,250 additional
  • SIMPLE IRA: $17,000 ($4,000 catch-up for 50+)
  • Traditional & Roth IRA: $7,500 ($1,100 catch-up for 50+)

Other Key Changes

  • Social Security wage base: $184,500 (up from $176,100) — this is the maximum income subject to Social Security tax
  • Annual gift tax exclusion: $19,000 per person per year (up from $18,000)
  • Itemized deduction limitation: The 37% tax bracket benefit for itemized deductions is now limited to 35% — a technical change that affects high-income filers

These are the tax rates and income ranges for 2026. Find your filing status and income level to see your marginal tax rate.

Single Filers

Income Range Tax Rate
$0 to $12,400 10%
$12,400 to $50,400 12%
$50,400 to $105,700 22%
$105,700 to $201,775 24%
$201,775 to $256,225 32%
$256,225 to $640,600 35%
Over $640,600 37%

Married Filing Jointly

Income Range Tax Rate
$0 to $24,800 10%
$24,800 to $100,800 12%
$100,800 to $211,400 22%
$211,400 to $403,550 24%
$403,550 to $512,450 32%
$512,450 to $768,700 35%
Over $768,700 37%

Married Filing Separately

Income Range Tax Rate
$0 to $12,400 10%
$12,400 to $50,400 12%
$50,400 to $105,700 22%
$105,700 to $201,775 24%
$201,775 to $256,225 32%
$256,225 to $384,350 35%
Over $384,350 37%

Head of Household

Income Range Tax Rate
$0 to $17,700 10%
$17,700 to $67,450 12%
$67,450 to $105,700 22%
$105,700 to $201,750 24%
$201,750 to $256,200 32%
$256,200 to $640,600 35%
Over $640,600 37%

Trusts & Estates

Income Range Tax Rate
$0 to $3,300 10%
$3,300 to $11,700 24%
$11,700 to $16,000 35%
Over $16,000 37%

How to Use These Brackets

Your "marginal tax rate" is the rate you pay on your last dollar of income. For example, if you're single and earn $75,000, you don't pay 22% on all of it—you pay 10% on the first $12,400, then 12% on income up to $50,400, then 22% on the remaining amount. This graduated system means the tax burden increases gradually with income.

These taxes are withheld from paychecks and pay for Social Security and Medicare benefits.

6.2%
Social Security
(Employee)
1.45%
Medicare
(Employee)
0.9%
Additional
Medicare Tax
3.8%
Net Investment
Income Tax

Social Security Tax (OASDI)

  • Employee rate: 6.2% of wages up to $184,500
  • Self-employed rate: 12.4% (you pay both employee and employer portions)
  • Wage base limit: $184,500 — once you earn this amount, no more Social Security tax is withheld

Medicare Tax

  • Employee rate: 1.45% on all wages (no income limit)
  • Self-employed rate: 2.9% (both portions)
  • Additional Medicare tax: 0.9% on wages exceeding:
    • $200,000 (Single)
    • $250,000 (Married, Filing Jointly)
    • $125,000 (Married, Filing Separately)

Net Investment Income Tax (NIIT)

  • Rate: 3.8% surtax on investment income
  • Applies to: Interest, dividends, capital gains, rental income, and other passive income
  • Threshold: Applies to investment income above:
    • $200,000 (Single)
    • $250,000 (Married, Filing Jointly)
    • $125,000 (Married, Filing Separately)

For CalSTRS/CalPERS Members

Your pension contributions to CalSTRS or CalPERS are typically not subject to federal income tax, but ARE subject to Social Security and Medicare taxes (if you're a public employee covered by FICA). If you're not covered by Social Security, you may be subject to the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO). Discuss this with your advisor if you receive both a pension and Social Security.

These are the maximum amounts you can contribute to retirement plans in 2026. This section is especially important for teachers and public employees.

401(k), 403(b), and 457(b) Plans

2026 Contribution Limits

  • Standard contribution: $24,500 (up from $23,500)
  • Catch-up contribution (age 50+): $8,000 (unchanged)
  • Special catch-up (age 60–63): $11,250 additional per year
  • Total maximum (age 60–63): $43,750 ($24,500 + $8,000 + $11,250)

IRA Contributions

  • Traditional or Roth IRA: $7,500 per year
  • Catch-up contribution (age 50+): $1,100
  • Combined limit: If you have both a Traditional and Roth IRA, your combined contributions cannot exceed $7,500

Roth IRA Income Limits (Phaseout Range)

Single: $150,000–$165,000 | Married, Filing Jointly: $236,000–$246,000 | If your income exceeds these amounts, you may not be able to contribute directly to a Roth IRA (though a "backdoor Roth" strategy may be available—consult your advisor).

Traditional IRA Deductibility (Active Participant)

Married, Filing Jointly (active participant in employer plan): $129,000–$149,000 | If you're covered by a 403(b) or pension plan at work and earn above this range, your Traditional IRA deduction may be limited or eliminated. Roth contributions remain available.

SIMPLE IRA Plans

  • Employee contribution: $17,000
  • Catch-up (age 50+): $4,000

SEP IRA (Self-Employed)

  • Maximum contribution: Up to 25% of net self-employment income, not to exceed $72,000

Defined Benefit & Defined Contribution Plans

  • Defined Benefit (pension) max benefit: $290,000 per year
  • Defined Contribution max contribution: $72,000
  • Max compensation considered for contributions: $360,000
  • Highly compensated employee threshold: $160,000

Qualified Longevity Annuity Contracts (QLACs)

  • Maximum investment: $210,000 (per spouse in a joint account)
  • QLACs provide guaranteed lifetime income starting at age 85 and can help reduce your Required Minimum Distributions

CalSTRS / CalPERS Note for Teachers & Public Employees

Your pension contributions to CalSTRS or CalPERS are separate from your 403(b) or 457(b) plan contributions. You can typically contribute to both simultaneously. If you're age 50 or older, you can put away up to $32,500 per year in a 403(b) ($24,500 base + $8,000 catch-up). If you're age 60–63, you may qualify for the special $11,250 super catch-up, bringing your total to $43,750. Your employer's matching contributions count toward these limits, so check with your HR department about how much you can contribute.

Long-term capital gains and qualified dividends get preferential tax treatment. Here are the 2026 rates.

Long-Term Capital Gains & Qualified Dividends Tax Rates

Tax Rate Single Filers Married, Filing Jointly
0% $0 to $49,450 $0 to $98,900
15% $49,450 to $545,500 $98,900 to $613,700
20% Over $545,500 Over $613,700

Why This Matters for Your Portfolio

If you're investing through Capital Wealth, gains from stocks held longer than one year and qualified dividends are taxed at these favorable rates—NOT at your ordinary income tax rate. For example, if you're in the 24% ordinary income bracket but have $100,000 in long-term gains, much of that gain may be taxed at 0% or 15% instead. This is one reason diversified, long-term investing is so powerful.

Short-Term Capital Gains

Short-term gains (assets held one year or less) are taxed as ordinary income at your regular tax bracket rate. This is why holding investments for at least a year can significantly reduce your tax bill.

The SALT cap limits how much state and local taxes you can deduct from your federal taxable income.

2026 SALT Cap

$20,000 combined cap per return year for state income taxes, property taxes, and sales taxes combined.

What This Means for California Residents

California has the highest state income tax rates in the nation (up to 13.3%), plus significant property taxes. Many high-earning Californians hit the SALT cap quickly. If you pay more than $20,000 in state and local taxes combined, you're "capped"—you can't deduct the excess. This may push some California residents toward the standard deduction rather than itemizing. Your advisor can help determine the best strategy for your situation.

What Counts Toward the Cap

  • State and local income taxes
  • State and local property taxes (real property)
  • Sales taxes (if you elect to deduct sales tax instead of income tax)

What Does NOT Count

  • Mortgage interest
  • Charitable contributions
  • Medical expenses
  • Federal income taxes
  • Business taxes (these may be deductible separately)

The AMT is a separate tax calculation designed to ensure high-income individuals pay at least a minimum amount of tax.

2026 AMT Exemption Amounts

  • Single: $88,575
  • Married, Filing Jointly: $139,900
  • Married, Filing Separately: $69,950

AMT Rate

  • 26% or 28% depending on income level

Do You Need to Worry About AMT?

AMT is primarily a concern for high-income earners (typically $200,000+) with significant deductions (charitable contributions, SALT, mortgage interest). Most middle-class taxpayers never encounter AMT. If you have significant deductions and high income, discuss this with your tax advisor.

These rules apply to large transfers of wealth during life or at death.

Annual Gift Tax Exclusion

  • Amount per person, per year: $19,000 (up from $18,000)
  • What this means: You can give up to $19,000 per recipient in 2026 without filing a gift tax return or using any of your lifetime exemption
  • Married couples: Can give up to $38,000 together ($19,000 each)

Lifetime Gift & Estate Tax Exemption

  • Unified credit exemption: $15,000,000 per person (subject to change after 2025)
  • What this means: You can give away or leave up to $15 million to heirs without federal gift or estate tax
  • Portability: Married couples can combine exemptions ($30 million total)

Estate Tax

  • Highest rate: 40% on estates exceeding the exemption threshold
  • Who files: Estates exceeding $15 million generally must file Form 706

Planning Alert: Exemption Scheduled to Sunset

The $15 million exemption is scheduled to expire on December 31, 2025, and revert to approximately $7 million (adjusted for inflation) starting in 2026. However, Congress may extend or modify this before the deadline. This is a critical planning opportunity. If you have a significant estate, discuss gift and estate tax planning with your advisor.

Once you reach a certain age, the IRS requires you to withdraw and pay taxes on retirement account funds.

RMD Age & Rules

  • RMD age for 2026: Age 73 (currently scheduled to increase to age 75 starting January 1, 2033)
  • How it's calculated: Your account balance on December 31 of the prior year divided by an IRS life expectancy factor
  • First RMD: Must be taken by April 1 of the year after you turn 73
  • Subsequent RMDs: Must be taken by December 31 each year
  • Penalty for missing RMD: 25% of the amount not withdrawn (or 10% if corrected within two years)

What Accounts Require RMDs

  • Traditional IRAs
  • SEP IRAs
  • SIMPLE IRAs
  • 401(k), 403(b), and 457(b) plans
  • Inherited IRAs (different rules apply)

What Accounts Do NOT Require RMDs

  • Roth IRAs (during the original owner's lifetime)
  • Roth 401(k) and Roth 403(b) (while still employed and not a 5% owner)
  • Health Savings Accounts (HSAs)

CalSTRS / CalPERS Members Take Note

Your pension distributions from CalSTRS or CalPERS are separate from RMDs on your 403(b) or IRA. If you have a 403(b), Traditional IRA, or other retirement account in addition to your CalSTRS or CalPERS pension, those accounts will be subject to RMDs starting at age 73. Plan ahead to make sure you can cover the RMD from your account balance.

RMD Strategies

  • Qualified Charitable Distribution (QCD): If you're charitably inclined, you can direct up to $100,000 per year from your IRA directly to a charity, and this counts toward your RMD without being taxed as income
  • Roth conversions: Consider converting Traditional IRA funds to a Roth before taking RMDs to reduce future withdrawals
  • Aggregation rule: If you have multiple Traditional IRAs or SEP IRAs, you can aggregate them for RMD calculation purposes

Ready to Plan for 2026 Taxes?

Tax planning isn't one-size-fits-all. Your situation—whether you're a CalSTRS teacher, CalPERS employee, or other public servant—deserves personalized advice.

Schedule a Tax Planning Session →