If you’re a resident of the United States, you’ll be interested in the new developments being implemented by the Internal Revenue Service (IRS). In a new report, Bloomberg Tax & Accounting has projected next year’s federal income tax brackets in the United States. Most of the new tax laws under the One Big, Beautiful Bill don’t take effect until tax year 2025, i.e., taxes due in 2026. Among the new developments are temporary deductions for tips, overtime, car loans, and even senior benefits.
Bloomberg Tax: “Offers professionally driven research and technology solutions that deliver timely”
Tax changes will therefore be seen starting in 2026. That’s why proper preparation is essential. “Our annual projections provide tax professionals with the timely, data-driven information they need to develop effective strategies for the upcoming fiscal year, well ahead of official IRS figures,” explained Evan Croen, director of Bloomberg Tax & Accounting. All this, as the IRS prepares to announce its latest inflation adjustments. Bloomberg Tax & Accounting, as they describe themselves, “offers professionally driven research and technology solutions that deliver timely, strategic insights to enable smarter decision-making.”
The Internal Revenue Service (IRS) has issued new tax guidelines that will mark a turning point for millions of taxpayers in the United States starting in 2025. The changes, driven by the One Big Beautiful Act (OBBA), signed by President Donald Trump, will entail significant shifts in family income and payments. “With persistent inflation affecting everything from individual tax brackets to the child tax credit, our integrated research and software solutions are essential for navigating these changes and optimizing tax planning,” says Bloomberg Tax & Accounting.
Example: A deduction of up to USD 25,000 for tips for workers in sectors with income reported by clients
Therefore, there are certain points to keep in mind. Each year, the IRS reviews its tax brackets to avoid what is known as “bracket creep,” when inflation pushes people into a higher tax bracket. For example, on the one hand, a deduction of up to USD 25,000 for tips for workers in sectors with income reported by clients. On the other hand, a deduction of up to USD 12,500 for overtime hours worked (or USD 25,000 for joint returners). This is something that can occur if a worker’s salary is adjusted upward to account for the rising cost of living, but this pay increase triggers an increase in the tax rate applied to a portion of their taxable income.
The change is so significant that the IRS has already confirmed that there will be a transition period in 2025 for employers and taxpayers who need to adapt to this deduction. In fact, the law has kept the rates applied to each tax bracket in effect in 2025; for example, the top bracket was supposed to rise to 39.6%, but will now remain at 37%. The Bloomberg Tax report also considers the provisions of the so-called “One Big Beautiful Bill,” the Republican-backed tax and spending legislation signed into law by President Trump in July.
The report includes a variety of income tax rates, with steeper adjustments for the lower brackets
According to Bloomberg Tax & Accounting, the IRS is expected to apply a 2.7% inflation rate to its new federal income tax brackets in 2026. Bloomberg Tax highlights, for example, that for individuals, the report includes a variety of income tax rates, with steeper adjustments for the lower brackets. It also includes an adjustment to the child tax credit, which has never been adjusted for inflation before.
In conclusion, and considering that the IRS tends to release its adjusted federal income tax brackets each fall, this is a first glimpse of what to expect. In any case, as always, we recommend staying up-to-date with developments regarding the IRS and the OBBA, and consulting only the official websites for each area.
