Adjustments and changes are coming for the 2026 tax year. The IRS has defined seven tax brackets, ranging from 10% to 37%, which are used to tax you based on your income level, in what is known as a progressive tax system. There will be a credit of up to US$8,231 and adjustments to the IRS tax brackets for 2026. These adjustments will affect deductions and credits, all as a result of the inflation currently affecting the economy of the country led by Donald Trump.
All adjustments will take effect next year, in preparation for taxation in 2026, which will be reflected in 2027 tax returns
As we mentioned at the beginning of this article, the new system incorporates an earned income credit that can reach $8,231 for certain taxpayers with three children. All adjustments will take effect next year, in preparation for taxation in 2026, which will be reflected in 2027 tax returns. The maximum annual deduction is $25,000, but in between, there are a series of adjustments applied according to each family’s circumstances, based on salary, expenses, income, etc.
The amounts of the brackets and the earned income tax credit have been updated to reflect the impact of inflation on the economy
To summarize and keep the key aspects in mind, the Internal Revenue Service has explained that the adjustments for tax year 2026 focus on three main aspects: first, the tax brackets; second, the deductions; and finally, the tax credits. According to the IRS, the amounts of the brackets and the earned income tax credit have been updated to reflect the impact of inflation on the economy. There will also be increases in the standard deductions and the child tax credit, with the goal of maintaining household purchasing power while balancing the tax burden. In other words, keeping the economy moving.
The deduction will apply fully to taxpayers with an adjusted gross income of $75,000 or less per year
According to the IRS, taxpayers with three eligible children will be eligible for a maximum credit of $8,231. The deduction will apply fully to taxpayers with an adjusted gross income of $75,000 or less per year ($150,000 for couples filing jointly) and will phase out for individuals with incomes above $75,000 per year. The requirements are very explicit and must be adhered to, as, for example, this deduction will not be available to individuals with incomes above $175,000 per year.
Those with two children will be able to receive up to $7,316, those with one child will be able to receive up to $4,427
In this regard, for example, seniors 65 and older will have three different ways to apply their deductions: the new temporary $6,000 deduction, the standard deduction, and an additional standard deduction previously available to this segment of the population. Those with two children will be able to receive up to $7,316, those with one child will be able to receive up to $4,427, and taxpayers without eligible dependents will be able to access $664.
The credit increased its value to $2,200 per child, with a refundable portion of at least $1,700
Let’s remember that the Child Tax Credit falls under the law signed by President Donald Trump in July, known as the “One Big Beautiful Bill.” The credit increased its value to $2,200 per child, with a refundable portion of at least $1,700. Furthermore, the possibility of claiming it was eliminated for some citizen children with parents without legal immigration status. By adjusting tax brackets each year, the IRS seeks to prevent “tax bracket creep,” so that inflation doesn’t erode the stability of taxpayers in higher tax brackets. And as we’ve mentioned in other articles, the importance of this financial aid or relief lies in keeping the country’s economy moving; in keeping citizens shopping at supermarkets and stores, so that inflation doesn’t further impoverish the poorest population.
