2026 Federal Tax Brackets
The One Big Beautiful Budget Act (OBBBA) made the Tax Cuts and Jobs Act (TCJA) individual tax brackets permanent. For 2026, the federal income tax brackets for single filers are:
| Rate | Single Filer Income | Married Filing Jointly |
|---|---|---|
| 10% | Up to $11,925 | Up to $23,850 |
| 12% | $11,926–$48,475 | $23,851–$96,950 |
| 22% | $48,476–$103,350 | $96,951–$206,700 |
| 24% | $103,351–$197,300 | $206,701–$394,600 |
| 32% | $197,301–$250,525 | $394,601–$501,050 |
| 35% | $250,526–$626,350 | $501,051–$751,600 |
| 37% | Over $626,350 | Over $751,600 |
Note: These are 2025 brackets adjusted for inflation. 2026 brackets will be released by the IRS in late 2025.
2026 California Tax Brackets
| Rate | Single Filer Income | Married Filing Jointly |
|---|---|---|
| 1% | Up to $10,756 | Up to $21,512 |
| 2% | $10,757–$25,499 | $21,513–$50,998 |
| 4% | $25,500–$40,245 | $50,999–$80,490 |
| 6% | $40,246–$55,866 | $80,491–$111,732 |
| 8% | $55,867–$70,606 | $111,733–$141,212 |
| 9.3% | $70,607–$360,659 | $141,213–$721,318 |
| 10.3% | $360,660–$432,787 | $721,319–$865,574 |
| 11.3% | $432,788–$721,314 | $865,575–$1,000,000 |
| 12.3% | Over $721,314 | Over $1,000,000 |
| 13.3% | Over $1,000,000 | Over $1,000,000 |
Combined Federal + California Rates
California taxpayers in the top brackets face some of the highest combined income tax rates in the world. At $500,000 of ordinary income, the combined marginal rate is approximately 37% federal + 12.3% California = 49.3%. At $1 million, it rises to 37% federal + 13.3% California = 50.3%. For self-employed individuals, add 3.8% Medicare (above $200K) for a combined marginal rate exceeding 54%.
Marginal vs. Effective Rate
Your marginal rate is the rate on your last dollar of income. Your effective rate is the average rate on all your income. Because the U.S. uses a progressive tax system, only income in the top bracket is taxed at the top rate. A taxpayer with $200,000 in taxable income does not pay 24% on all $200,000 — they pay 10% on the first $11,925, 12% on the next $36,550, 22% on the next $54,875, and 24% on the remainder. Their effective federal rate is approximately 17–18%.
OBBBA Impact on 2026 Brackets
The OBBBA made the TCJA's individual tax brackets permanent, preventing the scheduled 2026 reversion to higher pre-TCJA rates. Without the OBBBA, the top rate would have reverted to 39.6% and the 28% bracket would have returned. The OBBBA also permanently extended the higher standard deduction ($15,000 single / $30,000 MFJ for 2025, adjusted for inflation) and the higher AMT exemptions.
Bracket Management Strategies
KDA's bracket management strategies: (1) Roth conversions — convert traditional IRA funds to Roth in years when your income is lower, filling up lower brackets. (2) Income deferral — defer income to years when you expect to be in a lower bracket. (3) Income acceleration — accelerate income to the current year if you expect higher rates in future years. (4) Deduction bunching — concentrate deductions in alternating years to exceed the standard deduction threshold. (5) Capital gains harvesting — realize long-term gains in years when your income falls in the 0% capital gains bracket.
Need Help Implementing This?
KDA's licensed CPAs and Enrolled Agents work with California business owners every day. Book a free consultation to see exactly how this applies to your situation.
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