Blog Post - IRS Tax Changes

The IRS has shifted the income thresholds for 2026 tax brackets, changing the game for investors like you. If you overlook these updates, your tax bill might catch you off guard next year. This guide breaks down what's new with IRS tax brackets and capital gains limits, helping you plan smarter moves for 2026. Keep reading to see how these changes could affect your investment strategy and tax outcomes.

Understanding IRS Tax Brackets

Let's start with the basics. Tax brackets can seem tricky, but they're key to figuring out how much you'll owe the IRS each year.

What Are IRS Tax Brackets?

IRS tax brackets are income ranges that set how much tax you pay. Think of them as buckets for your money. Each bucket has a different tax rate.

The more you earn, the more buckets you fill. You pay the rate for each bucket, not just one rate for all your income. This system is called progressive taxation.

Why should you care? Knowing your tax bracket helps you make smarter money moves. You can time when to sell investments or take bonuses to keep more of your hard-earned cash.

Changes in 2026: What to Expect

Big news: The IRS is tweaking the tax brackets for 2026. They're adjusting for inflation, which means the income ranges for each tax rate are getting wider.

Here's what's not changing: The tax rates themselves (10%, 12%, 22%, and so on) will stay the same in 2026. What's new is how much income fits into each bracket.

Let's look at an example. For married couples filing together, the 24% bracket will start at $211,401 in 2026. That's up from $206,701 in 2025 - almost $4,700 higher!

What does this mean for you? You might be able to earn more before hitting a higher tax rate. But watch out - if you're near the edge of a bracket, a raise or investment gain could still bump you up.

Capital Gains Tax Insights

Now let's talk about the tax you pay when you sell an investment for more than you paid. This is where things get interesting for your portfolio.

Capital Gains Tax Rates

Good news: The main capital gains tax rates (0%, 15%, 20%) aren't going up in 2026. But the income levels where these rates kick in are changing.

Here's the scoop for 2026:

• If you're single, you can make up to $49,450 before paying any capital gains tax.

• Married and filing jointly? Your 0% rate goes up to $98,900.

• The 20% rate starts at $545,501 for singles and $613,701 for married couples.

Why does this matter? You might be able to sell more investments at a lower tax rate. This could mean keeping more of your profits in your pocket.

Implications for Your Portfolio

So how do these changes shake up your investment world? Let's break it down.

First, timing is everything. If you're close to a new bracket cutoff, you'll want to be smart about when you sell. Selling too much in one year could push you into a higher tax rate.

Second, these changes make tax-smart investing even more important. You might want to look at strategies like tax-loss harvesting. Or you could hold onto investments longer to get the lower long-term capital gains rates.

Don't forget about your retirement accounts. Traditional IRAs and 401(k)s can help you put off taxes. Roth accounts let your money grow tax-free. These accounts look even better now, especially if you're a high earner.

Remember, every dollar you save on taxes is a dollar that can keep growing in your portfolio. That's why it's so important to understand these changes and plan ahead.