Every fall, the IRS releases inflation-adjusted tax brackets and deduction amounts for the following tax year. These numbers directly affect how much you owe on salary, bonuses, RSU vesting income, and ISO exercise gains. Whether you're planning a large stock option exercise or estimating your RSU withholding shortfall, having the correct brackets is the starting point for every calculation.
Below you'll find the complete 2026 federal income tax rate schedules for all four filing statuses, plus standard deductions, AMT exemptions, FICA thresholds, and capital gains rates — all sourced from official IRS Revenue Procedures.
2026 Federal Income Tax Brackets
The 2026 tax year uses brackets set by IRS Revenue Procedure 2024-40, which was published in the fall of 2024 for use in the 2025 filing year and carried forward. The seven marginal rates remain unchanged: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Only the income thresholds change, adjusted upward for inflation.
Single Filers
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 – $11,925 |
| 12% | $11,925 – $48,475 |
| 22% | $48,475 – $103,350 |
| 24% | $103,350 – $197,300 |
| 32% | $197,300 – $250,525 |
| 35% | $250,525 – $626,350 |
| 37% | Over $626,350 |
Married Filing Jointly
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 – $23,850 |
| 12% | $23,850 – $96,950 |
| 22% | $96,950 – $206,700 |
| 24% | $206,700 – $394,600 |
| 32% | $394,600 – $501,050 |
| 35% | $501,050 – $751,600 |
| 37% | Over $751,600 |
Married Filing Separately
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 – $11,925 |
| 12% | $11,925 – $48,475 |
| 22% | $48,475 – $103,350 |
| 24% | $103,350 – $197,300 |
| 32% | $197,300 – $250,525 |
| 35% | $250,525 – $375,800 |
| 37% | Over $375,800 |
Head of Household
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 – $17,000 |
| 12% | $17,000 – $64,850 |
| 22% | $64,850 – $103,350 |
| 24% | $103,350 – $197,300 |
| 32% | $197,300 – $250,500 |
| 35% | $250,500 – $626,350 |
| 37% | Over $626,350 |
2026 Standard Deductions
The standard deduction reduces your gross income before tax brackets apply. Most taxpayers claim the standard deduction rather than itemizing.
| Filing Status | Standard Deduction |
|---|---|
| Single | $15,750 |
| Married Filing Jointly | $31,500 |
| Married Filing Separately | $15,750 |
| Head of Household | $23,625 |
These deductions reduce your taxable income before brackets apply. For example, a single filer earning $120,000 has taxable income of $104,250 after the standard deduction — putting them in the 24% marginal bracket, not the 22% bracket they might expect from gross income alone.
Alternative Minimum Tax (AMT) Exemptions
The Alternative Minimum Tax is a parallel tax system designed to ensure high-income taxpayers pay a minimum effective rate. For employees with equity compensation, AMT is especially relevant because exercising Incentive Stock Options (ISOs) creates a "bargain element" that counts as income under AMT but not regular tax.
| Filing Status | AMT Exemption | Phase-Out Threshold |
|---|---|---|
| Single | $88,100 | $626,350 |
| Married Filing Jointly | $137,000 | $1,252,700 |
| Married Filing Separately | $68,500 | $626,350 |
| Head of Household | $88,100 | $626,350 |
AMT Tax Rates:
- 26% on the first $239,100 of alternative minimum taxable income (AMTI) above the exemption
- 28% on AMTI amounts above that $239,100 threshold
The exemption is reduced by $0.25 for every $1 of AMTI above the phase-out threshold. For a single filer, the exemption is fully eliminated at $978,750 of AMTI.
If you hold ISOs and plan to exercise, AMT can create a significant additional tax liability. The spread between your exercise price and fair market value is added to AMTI in the year you exercise. Use our ISO AMT Calculator to find your AMT-free exercise limit before you trigger a surprise tax bill.
FICA and Payroll Tax Thresholds
These payroll taxes apply to wages, including RSU vesting income and ISO disqualifying dispositions.
| Tax | Rate | Wage Base / Threshold |
|---|---|---|
| Social Security (OASDI) | 6.2% | $176,100 |
| Medicare | 1.45% | No limit |
| Additional Medicare | 0.9% | $200,000 (Single) / $250,000 (MFJ) |
| Federal Supplemental Withholding | 22% | Up to $1,000,000 |
| Federal Supplemental (over $1M) | 37% | Above $1,000,000 |
Why supplemental rates matter for equity compensation: RSU vesting income is classified as "supplemental wages" and withheld at a flat 22% — regardless of your actual marginal tax rate. For most tech employees earning above $103,350 (the start of the 24% bracket), this creates a withholding shortfall. Employees in the 32% or 35% bracket could be under-withheld by 10-13 percentage points on every RSU vest. See our RSU tax withholding guide for a detailed breakdown.
Calculate RSU Withholding
Estimate your RSU tax withholding and net proceeds after vesting.
Try Calculator →How Tax Brackets Apply to RSU Income
RSU income is added on top of your regular salary as ordinary income. This "stacking" effect pushes your total compensation into higher marginal brackets — but your employer withholds at the flat 22% supplemental rate instead of your actual marginal rate.
Example: Single filer with RSU vesting
- Base salary: $200,000
- RSU vesting: $100,000
- Total W-2 income: $300,000
- Taxable income (after $15,750 standard deduction): $284,250
At $284,250, the marginal rate is 35% (the 35% bracket starts at $250,525 for single filers). But the employer only withheld 22% on the $100,000 RSU portion — that's $22,000 in withholding vs. roughly $33,000 in actual tax on those RSU dollars. The result is an $11,000+ withholding shortfall due at tax time.
This is the single most common reason tech employees receive surprise tax bills in April. For a complete breakdown, see our RSU tax rate guide and RSU tax withholding guide. You can also calculate your exact shortfall with our RSU Calculator.
AMT Brackets vs. Regular Tax Brackets
The federal tax system effectively runs two parallel calculations on your income:
- Regular tax — Uses the seven brackets above (10% through 37%) with standard deductions, personal exemptions, and itemized deductions.
- Alternative Minimum Tax (AMT) — Uses a flatter two-rate structure (26% and 28%) with fewer allowed deductions and a larger exemption.
You pay whichever amount is higher. For most W-2 employees, regular tax is higher. But ISO exercises change this calculus because the bargain element (the spread between exercise price and fair market value) is added to AMT income but not regular income.
How AMT triggers work with ISOs:
- You exercise 10,000 ISOs with a $5 exercise price when FMV is $25
- The $200,000 spread ($20 x 10,000) is added to your AMT income
- Your AMT liability may now exceed your regular tax
- The difference is your "AMT bill" — an additional tax on top of your regular income tax
The good news: AMT paid on ISO exercises generates an AMT credit that you can recover in future years when you sell the shares or when your regular tax exceeds AMT. Learn more in our AMT calculator guide and use the ISO AMT Calculator to model different exercise quantities.
State Income Tax Comparison
State taxes add a significant layer on top of federal tax for equity compensation. Here are the key rates for the four most common states among tech employees:
| State | Top Rate | Supplemental Rate | Notes |
|---|---|---|---|
| California | 13.3% | 10.23% | Includes 1% Mental Health Services Tax on income over $1M |
| New York | 10.9% | 11.70% | Plus NYC tax up to 3.876% for city residents |
| Texas | 0% | N/A | No state income tax |
| Washington | 0% | N/A | No state income tax |
For California and New York residents, the combined federal + state marginal rate on RSU income can exceed 50%. See our detailed guides: California Income Tax and New York Income Tax.
Capital Gains Tax Rates (2026)
Long-term capital gains (assets held over one year) are taxed at preferential rates:
| Filing Status | 0% Rate | 15% Rate | 20% Rate |
|---|---|---|---|
| Single | Up to $48,475 | $48,475 – $533,400 | Over $533,400 |
| Married Filing Jointly | Up to $96,950 | $96,950 – $600,050 | Over $600,050 |
| Married Filing Separately | Up to $48,475 | $48,475 – $300,000 | Over $300,000 |
| Head of Household | Up to $64,850 | $64,850 – $566,700 | Over $566,700 |
Why this matters for equity compensation:
- RSUs are taxed as ordinary income at vesting. But if you hold shares after vesting for more than one year, any post-vesting appreciation qualifies for long-term capital gains rates when you sell.
- ISOs can qualify for long-term capital gains on the entire spread if you meet both holding period requirements: hold shares at least 2 years from grant and 1 year from exercise.
- 83(b) elections convert future appreciation from ordinary income to long-term capital gains, potentially saving 17+ percentage points on every dollar of growth.
For more on how each equity type is taxed, see How RSUs Are Taxed and 83(b) Elections Explained.
Key Changes from 2025 to 2026
Since the 2026 tax year uses the IRS-announced 2025 values (the IRS announces rates each fall for the following year), the key changes from the prior year include:
- Standard deduction increased from $14,600 to $15,750 (single), from $29,200 to $31,500 (MFJ)
- AMT exemption increased from $85,700 to $88,100 (single), from $133,300 to $137,000 (MFJ)
- AMT phase-out threshold increased from $609,350 to $626,350 (single)
- Tax bracket thresholds shifted upward across all brackets (e.g., 24% bracket for single starts at $103,350, up from $100,525)
- Social Security wage base increased from $168,600 to $176,100
These inflation adjustments mean slightly more income is sheltered in lower brackets, but the effect is modest — roughly $300-500 in tax savings for most filers compared to the prior year.
Frequently Asked Questions
What are the 2026 federal tax brackets? The 2026 tax year has seven marginal rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For single filers, the 37% rate applies to taxable income over $626,350. For married filing jointly, the 37% rate kicks in at $751,600. These brackets apply to taxable income (after the standard deduction), not gross income.
Did tax brackets change for 2026? The seven rates (10% through 37%) remain unchanged. However, the income thresholds shifted upward due to inflation adjustments. For example, the 24% bracket for single filers now starts at $103,350 (up from $100,525 in 2025), and the standard deduction increased to $15,750 (up from $14,600). The net effect is approximately $300-500 in savings for most filers.
How do tax brackets affect RSU income? RSU income is added on top of your salary as ordinary income, pushing your total W-2 into higher marginal brackets. However, your employer withholds only 22% on RSU income (the federal supplemental rate) regardless of your actual bracket. If your total income puts you in the 32% or 35% bracket, you face a 10-13 percentage point withholding shortfall — typically $5,000-$15,000 owed at tax time. Use our RSU Calculator to find your exact gap.
What is the AMT exemption for 2026? The 2026 AMT exemption is $88,100 for single filers and $137,000 for married filing jointly. The exemption phases out at $626,350 (single) and $1,252,700 (MFJ), reduced by $0.25 for every $1 of alternative minimum taxable income above the threshold. For single filers, the exemption is fully eliminated at $978,750 of AMTI. AMT is especially relevant for ISO holders — use our ISO AMT Calculator to model the impact.
Are capital gains brackets different from income tax brackets? Yes. Long-term capital gains (assets held over one year) use three rates: 0%, 15%, and 20%. For single filers in 2026, the 0% rate applies to taxable income up to $48,475, the 15% rate covers $48,475-$533,400, and the 20% rate applies above $533,400. This matters for equity compensation: RSUs are taxed as ordinary income at vesting (up to 37%), but any post-vesting appreciation held over a year qualifies for the lower capital gains rates when sold.
How do I calculate my effective tax rate for 2026? Divide your total federal tax by your total taxable income. Because brackets are marginal (each rate applies only to income within that range), your effective rate is always lower than your top marginal rate. For example, a single filer with $200,000 in taxable income pays: 10% on the first $11,925 + 12% on $11,925-$48,475 + 22% on $48,475-$103,350 + 24% on $103,350-$197,300 + 32% on $197,300-$200,000 = approximately $42,200, for an effective rate of about 21.1%.
Calculate Your ISO AMT
Use our ISO AMT Calculator to find the optimal number of shares to exercise without triggering AMT.
Try Calculator →One exercise is good. A 5-year plan is $128K better.
The Multi-Year Exercise Planner models Conservative, Balanced, and Aggressive strategies side-by-side — so you can see exactly how spreading exercises across 3-5 years reduces your total tax bill.
- Compare 3 strategies with exact tax projections
- AMT credit carryforward tracking across years
- Exit sensitivity analysis at different valuations
Tax Disclaimer: This content is for educational purposes only. Always consult with a licensed tax professional or certified public accountant before making financial decisions related to equity compensation, tax planning, or investment strategies.