Here's How The IRS' Adjusted Tax Brackets Will Affect The Middle Class

If you're curious about how the new 2025 income tax brackets will affect you, you're not alone. In 2025 and 2026, whether you earn an annual income that's below the poverty line, or your net worth is now in the top 10% of income earners, the IRS adjusted tax brackets should leave more money in your pocket come tax season. You can thank a lower tax burden on individual income for this: Per a September 2025 release by Bloomberg Tax, it's projected that the current tax rate in the U.S. will increase income thresholds due to the estimated 2.7% rise in inflation from 2025 to 2026. This adjustment for inflation has the potential to benefit millions of Americans by unlocking the door to homeownership and turning the U.S. housing sector into more of a buyer's market.

While there's been a lot of discussion about how President Trump's One Big Beautiful Bill Act (OBBA) could negatively impact lower-income households, the middle class could see new tax brackets for 2025 and 2026 that may actually benefit it. The United States Census Bureau places the median salary in the U.S. in 2024 at $61,702. According to Pew Research, the middle class is made up of anyone who earns between ⅔ and double the median income, so this could be of particular interest to anyone who earns anywhere between roughly $41,000 and $123,000. In fact, these adjustment have potential benefits for lots of people who earn above the bottom 10% of households.

The IRS has already provided its tax inflation adjustments for 2025, which offer another way to tell which federal tax bracket you're in. Remember: You aren't taxed on your total amount of income earned in a year, just the percentage of income earned within each bracket. Take the Census Bureau's 2024 median income of $61,702, for example. According to the IRS, if an individual earned $61,702 for their 2025 tax year, they would pay 12% on the initial $48,475, then 22% on the remainder up until $61,702. Those who earned more would continue paying 22% until they reach the bracket's maximum of $103,350.

Adjusting the tax for inflation raises your taxable income threshold by negating bracket creep, the effect that occurs when inflation pushes you into a higher tax bracket even if your income doesn't increase. As Bloomberg Tax projects, if you earned $61,702 in 2026, your tax rate could be 12% on the first $50,400, and 22% on the remainder. Anyone who earns above the median will not have to enter the 24% bracket unless they make over $105,700. For the 12% tax bracket, that's an income threshold raise of $1,925, and a $2,350 raise for the 22% bracket. This both lowers the tax burden for middle class Americans and leaves more money to save for down payments. These savings can provide a financial cushion, and even motivate lenders to qualify more people for mortgages.