2026 Federal and Georgia Tax Rates: A Complete Reference
Robert Stowe, AAMS® | Investment Advisor
The 2026 tax year brings significant changes at both federal and state levels. Federal rates remain at the seven-bracket structure established by the Tax Cuts and Jobs Act, now made permanent by the One Big Beautiful Bill Act (OBBBA). Georgia accelerated its flat-tax reductions in May 2026, dropping the rate directly to 4.99% for 2026 under HB 463 (retroactive to January 1, 2026). Understanding these rates, and how they interact across income types, is fundamental to effective tax planning.
What OBBBA Prevented: The "Tax Cliff"
Without the One Big Beautiful Bill Act, the Tax Cuts and Jobs Act provisions were scheduled to expire after 2025. This would have triggered a significant "tax cliff" for 2026: brackets would have reverted to pre-2017 rates (with a 39.6% top bracket instead of 37%), the standard deduction would have dropped to roughly half its current level, and personal exemptions would have returned at approximately $5,300 per person.
OBBBA made the TCJA rates permanent and further enhanced the standard deduction, eliminating this cliff and providing tax certainty for long-term planning. The rates shown in this guide reflect the post-OBBBA structure that will remain in place indefinitely.
In This Guide
- Federal Income Tax Brackets
- Interactive Bracket Visualization
- Capital Gains Tax Rates
- Dividend Taxation
- Standard Deduction Amounts
- Alternative Minimum Tax
- Georgia State Income Tax
- Tax Planning Examples
- Key Takeaways
Federal Ordinary Income Tax Brackets for 2026
The seven federal marginal tax rates range from 10% to 37% , with bracket thresholds adjusted approximately 4% for inflation per IRS Revenue Procedure 2025-32. Short-term capital gains and non-qualified dividends are taxed at these ordinary rates.
| Tax Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 | $0 – $12,400 | $0 – $17,700 |
| 12% | $12,401 – $50,400 | $24,801 – $100,800 | $12,401 – $50,400 | $17,701 – $67,450 |
| 22% | $50,401 – $105,700 | $100,801 – $211,400 | $50,401 – $105,700 | $67,451 – $105,700 |
| 24% | $105,701 – $201,775 | $211,401 – $403,550 | $105,701 – $201,775 | $105,701 – $201,750 |
| 32% | $201,776 – $256,225 | $403,551 – $512,450 | $201,776 – $256,225 | $201,751 – $256,200 |
| 35% | $256,226 – $640,600 | $512,451 – $768,700 | $256,226 – $384,350 | $256,201 – $640,600 |
| 37% | Over $640,600 | Over $768,700 | Over $384,350 | Over $640,600 |
Understanding Marginal vs. Effective Rates
These are marginal rates: each rate applies only to income within that bracket, not to your entire income. A single filer with $100,000 taxable income doesn't pay 22% on everything; they pay 10% on the first $12,400, 12% on the next $38,000, and 22% on the remaining $49,600.
Result: Their total federal tax is approximately $16,700, yielding an effective rate of 16.7%, significantly lower than their 22% marginal rate.
Marriage Penalty at Higher Incomes
The 37% bracket for married filing separately kicks in at $384,350, exactly half of the joint threshold. This creates a potential "marriage penalty" for high earners who file separately, as each spouse reaches the top bracket at lower income than they would filing individually.
Interactive Tax Bracket Visualization
Understanding how marginal tax brackets work is essential for effective tax planning. The visualization below shows how federal income tax accumulates across brackets for different filing statuses. This happens because each bracket applies only to income within its range, not to your total income.
Federal Tax Brackets by Filing Status
Capital Gains Tax Rates for 2026
Capital gains taxation depends on holding period, income level, and asset type. The federal system distinguishes sharply between short-term and long-term gains, a distinction that fundamentally affects investment strategy and timing decisions. For strategies to manage capital gains taxes, see our tax-loss harvesting guide.
Short-Term Capital Gains (Held ≤1 Year)
Short-term gains receive no preferential treatment and are taxed as ordinary income at your marginal rate (10%–37%). Combined with the 3.8% Net Investment Income Tax for high earners, the maximum effective rate reaches 40.8% .
Long-Term Capital Gains (Held >1 Year)
Long-term gains benefit from preferential rates of 0%, 15%, or 20% based on taxable income:
| Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 0% | $0 – $49,450 | $0 – $98,900 | $0 – $49,450 | $0 – $66,200 |
| 15% | $49,451 – $545,500 | $98,901 – $613,700 | $49,451 – $306,850 | $66,201 – $579,600 |
| 20% | Over $545,500 | Over $613,700 | Over $306,850 | Over $579,600 |
Capital Gains Rate Comparison
The 0% Bracket Opportunity
The 0% rate benefits taxpayers in lower brackets. A married couple with $98,900 or less in taxable income (including capital gains) pays zero federal tax on long-term gains. This creates significant planning opportunities:
- Retirees: Harvest gains during low-income years before Social Security and RMDs begin
- Variable income earners: Realize gains in years when other income is reduced
- Strategic rebalancing: Sell appreciated assets tax-free to rebalance portfolios
This happens because capital gains are "stacked" on top of ordinary income when determining which rate applies. If your ordinary income keeps you in the 0% zone, your gains benefit from that preferential rate.
Net Investment Income Tax (NIIT): The 3.8% Surcharge
The NIIT applies to investment income, including capital gains, dividends, interest, rental income, and passive business income, when modified adjusted gross income exceeds fixed thresholds. Unlike regular brackets, NIIT thresholds are not indexed for inflation , meaning more taxpayers become subject to this tax each year.
| Filing Status | NIIT Threshold (MAGI) |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
| Head of Household | $200,000 |
| Estates and Trusts | $16,100 |
The 3.8% tax applies to the lesser of net investment income or the amount by which MAGI exceeds the threshold. Combined with the 20% long-term rate, high-income investors face a maximum federal rate of 23.8% on long-term gains.
Special Rates for Collectibles and Depreciation Recapture
| Asset Type | Maximum Rate | Notes |
|---|---|---|
| Collectibles (art, coins, precious metals, antiques) | 28% | Long-term gains only; if ordinary rate is lower, pay ordinary rate |
| Section 1250 Unrecaptured Gain (real estate depreciation) | 25% | Applies to depreciation claimed on real property |
| Qualified Small Business Stock (Section 1202) | 28% | Non-excluded portion; may qualify for partial or full exclusion if held 5+ years |
For collectibles and Section 1250 gains, if your marginal rate falls below the cap, you pay the lower ordinary rate. The caps act as ceilings, not floors.
Dividend Taxation for 2026
Qualified Dividends: Preferential Treatment
Qualified dividends are taxed at the same preferential rates as long-term capital gains: 0%, 15%, or 20%, using identical income thresholds. This preferential treatment exists because Congress determined that dividend-paying investments warrant the same tax benefit as long-term capital gains.
For dividends to qualify, two requirements must be met:
Issuer Requirement
The dividend must be paid by a U.S. corporation, a corporation in a U.S. possession, a foreign corporation eligible for U.S. treaty benefits, or a foreign corporation traded on a major U.S. exchange.
Holding Period Requirement
Common stock: More than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Preferred stock: More than 90 days during a 181-day window.
Non-Qualified Dividends: Ordinary Rates
Non-qualified (ordinary) dividends are taxed at marginal rates of 10%–37% . Common sources include REIT distributions (most are non-qualified, though they may receive a 20% QBI deduction), MLP distributions (Master Limited Partnership payments are generally ordinary income), money market fund dividends (interest income passed through as dividends), dividends on shares not meeting the 60/90-day holding period requirement, and certain foreign dividends from corporations not eligible for treaty benefits.
Maximum Combined Rates on Investment Income
| Income Type | Base Rate | + NIIT (3.8%) | Maximum Combined |
|---|---|---|---|
| Short-term capital gains | 37% | Yes | 40.8% |
| Non-qualified dividends | 37% | Yes | 40.8% |
| Long-term capital gains | 20% | Yes | 23.8% |
| Qualified dividends | 20% | Yes | 23.8% |
| Collectibles (long-term) | 28% | Yes | 31.8% |
| Section 1250 recapture | 25% | Yes | 28.8% |
Combined Federal Tax Rates on Investment Income
Standard Deduction Amounts for 2026
The One Big Beautiful Bill Act (OBBBA) permanently increased standard deduction amounts beyond the original Revenue Procedure 2025-32 figures. These enhanced amounts represent the largest standard deductions in U.S. history.
Base Standard Deduction
| Filing Status | 2026 Standard Deduction |
|---|---|
| Single | $16,100 |
| Married Filing Jointly | $32,200 |
| Married Filing Separately | $16,100 |
| Head of Household | $24,150 |
Additional Amounts for Age 65+ or Blindness
| Situation | Additional Amount |
|---|---|
| Married or surviving spouse (per qualifying person) | $1,650 |
| Single or Head of Household | $2,050 |
Taxpayers who are both 65+ and blind receive both additional amounts.
New Senior Bonus Deduction (2026–2028)
The OBBBA created a $6,000 additional deduction for taxpayers age 65 and older, available to both itemizers and non-itemizers. This represents a significant new benefit for retirees.
| Filing Status | Maximum Bonus | Phase-out Begins (MAGI) | Phase-out Complete |
|---|---|---|---|
| Single/HOH | $6,000 | $75,000 | $175,000 |
| Married Filing Jointly (both 65+) | $12,000 | $150,000 | $250,000 |
| Married Filing Separately | Not available | ||
Example: Senior Couple's Total Deduction
A married couple (both 65+) with MAGI under $150,000 receives a total 2026 standard deduction of:
- Base deduction: $32,200
- Additional for age (2 × $1,650): $3,300
- Senior bonus deduction: $12,000
Total: $47,500, nearly $48,000 of income completely shielded from federal tax before any itemized deductions.
Dependent Standard Deduction Limitation
For individuals claimed as dependents, the standard deduction cannot exceed the greater of $1,350 or $500 plus earned income (capped at the normal standard deduction for their filing status).
Federal vs. Georgia Standard Deductions: Itemizing Considerations
Georgia's standard deduction ($24,000 MFJ) is significantly lower than the federal amount ($32,200 MFJ). This creates an important planning consideration: you might itemize on your Georgia return even when taking the standard deduction federally, if your itemized deductions exceed $24,000 but fall short of $32,200.
However, the elevated federal standard deduction means fewer than 10% of taxpayers now benefit from itemizing federally. For most Georgia residents, the math favors taking the standard deduction on both returns unless they have substantial mortgage interest, charitable contributions, or state/local taxes (capped at $40,000 federally under OBBBA). Before assuming itemizing makes sense, compare your actual deductible expenses against both thresholds.
Alternative Minimum Tax (AMT) for 2026
The Alternative Minimum Tax (AMT) exists as a parallel tax system designed so that high-income taxpayers with significant deductions pay at least a minimum amount of tax. You calculate your tax under both the regular system and the AMT system, then pay whichever is higher.
AMT Exemption Amounts for 2026
| Filing Status | Exemption | Phase-out Begins | Phase-out Complete |
|---|---|---|---|
| Single/HOH | $90,100 | $640,600 | $1,001,000 |
| Married Filing Jointly | $140,200 | $1,281,200 | $1,842,000 |
| Married Filing Separately | $70,100 | $640,600 | $921,000 |
| Estates and Trusts | $31,400 | $104,800 | $230,400 |
The exemption phases out at 25 cents per dollar of alternative minimum taxable income (AMTI) above the threshold. AMT rates are 26% on AMTI up to $248,700 ($124,350 for MFS) and 28% on amounts above.
Other Notable 2026 Provisions
| Item | 2026 Amount/Status |
|---|---|
| Personal exemption | $0 (permanently eliminated) |
| SALT deduction cap | $40,000 ($20,000 MFS); phases out above $500,000 MAGI |
| Mortgage interest limit | $750,000 of acquisition debt ($375,000 MFS) |
| Medical expense threshold | Expenses exceeding 7.5% of AGI |
| Charitable contribution (non-itemizers) | Up to $1,000 ($2,000 MFJ) under OBBBA |
Georgia State Income Tax for 2026
Georgia completed its transition from a six-bracket progressive system to a flat tax in 2024. For 2026, the rate dropped to 4.99% under HB 463, signed May 11, 2026 and made retroactive to January 1, 2026. HB 463 bypassed the previously scheduled 5.09% step (set by HB 111 in 2025) and moved the state to its 4.99% target three years ahead of plan.
Georgia's Flat Rate Trajectory
| Tax Year | Rate |
|---|---|
| 2023 | 5.49% |
| 2024 | 5.39% |
| 2025 | 5.19% |
| 2026 | 4.99% |
| 2027 and beyond (scheduled) | Further 0.125% annual reductions toward 3.99% |
Under HB 463, the rate is authorized to decline by 0.125 percentage points each year from 2027 through 2034 toward a 3.99% floor, subject to the existing revenue triggers (state revenue growth of at least 3%, net collections above the prior three-year average, and adequate shortfall reserves) carried over from HB 111.
Georgia Tax Rate Reduction Timeline
Georgia Standard Deduction and Exemptions
| Filing Status | Standard Deduction | Dependent Exemption |
|---|---|---|
| Single | $12,000 | $4,000 per dependent |
| Married Filing Jointly | $24,000 | $4,000 per dependent |
| Married Filing Separately | $12,000 | $4,000 per dependent |
| Head of Household | $12,000 | $4,000 per dependent |
The $4,000 dependent exemption (increased from $3,000 via HB 1021 in 2024) applies per qualifying dependent.
Standard Deduction Increases Begin in 2027
HB 463 raises the Georgia standard deduction starting with the 2027 tax year (not retroactively for 2026). Single filers move from $12,000 to $15,000, then up $375 per year until reaching $18,000. Married filing jointly moves from $24,000 to $30,000, then up $750 per year until reaching $36,000. The retirement income exclusion for those 62 and older also rises from $65,000 to $70,000 per person beginning in 2027. For tax years 2026 through 2028, Georgia adds a temporary state exclusion of up to $1,750 of combined overtime pay and cash tips; the Georgia cap is narrower than the federal OBBBA exclusion, so the state and federal treatment will not match.
Capital Gains and Dividends: No Preferential Treatment
Georgia taxes all capital gains as ordinary income at the flat 4.99% rate regardless of holding period. The state does not distinguish between short-term and long-term gains. Similarly, all dividends (qualified and non-qualified) are taxed as ordinary income at 4.99%.
However, Georgia follows federal exclusions: Section 121 exclusions on home sales, Section 1031 like-kind exchange deferrals, and exemption for interest on federal obligations (Treasury securities).
Recent Georgia Tax Legislation
| Bill | Effective | Key Provisions |
|---|---|---|
| HB 463 (May 2026) | Retroactive to Jan 1, 2026 | Cut rate from 5.19% directly to 4.99%, bypassing the prior 5.09% step; authorized 0.125% annual reductions from 2027 through 2034 toward a 3.99% floor; raised standard deductions and the retirement income exclusion ($65,000 → $70,000 per person) beginning 2027; added a temporary state exclusion of up to $1,750 combined of overtime pay and cash tips for tax years 2026 through 2028 |
| SB 33 (May 2026) | 2026 | Established the Local Homestead Option Sales Tax (LHOST), a 1% local sales tax counties can adopt to fund the expanded homestead exemptions enacted under HB 581 (2024). SB 33 funds the property-tax-growth limit; HB 581 is what actually caps homestead assessment increases at the rate of inflation. |
| HB 111 (April 2025) | Retroactive to Jan 1, 2025 | Reduced rate from 5.39% to 5.19% (2025); originally scheduled 5.09% for 2026 before being superseded by HB 463 |
| HB 112 (April 2025) | 2026 | One-time rebates: $250 (single), $375 (HOH), $500 (MFJ) |
| HB 1015 (April 2024) | 2024 | Reduced rate from 5.49% to 5.39% |
| HB 1021 (April 2024) | 2024 | Increased dependent exemption to $4,000 |
| HB 1437 (April 2022) | 2024 | Established flat tax system, eliminated brackets |
Tax Planning Examples
Understanding how these rates interact in real situations reveals planning opportunities that may not be obvious from the tables alone.
Example 1: Married Couple in the 0% Capital Gains Zone
James and Linda are a married couple, both 66, living in Georgia. Their 2026 income:
- Social Security benefits: $48,000 (only $40,800 taxable at 85%)
- Pension income: $30,000
- Unrealized long-term capital gains: $50,000
Analysis:
- Total ordinary income before gains: $70,800
- Standard deduction (with senior bonus): $47,500
- Taxable ordinary income: $23,300
- 0% capital gains threshold: $98,900
- Available 0% cap gains space: $75,600
They can realize $50,000 in long-term gains at 0% federal tax . Georgia taxes these gains at 4.99%, costing approximately $2,495 in state tax. Total tax on $50,000 of gains: $2,495 (5.0% effective rate).
Opportunity: This strategy works each year they remain in this income range, systematically harvesting gains at minimal tax cost to reset cost basis and reduce future tax liability.
Example 2: Roth Conversion in the "Gap Years"
Michael, 65, just retired in Georgia. He has $900,000 in Traditional IRA funds and won't start Social Security until 67. His only 2026 income is $15,000 from a part-time consulting project.
Analysis:
- Current taxable income: $15,000
- Standard deduction: $18,150 (single 65+ with $2,050 additional)
- Taxable income after deduction: $0
- Room in 12% bracket: $50,400
- Room in 22% bracket: additional $55,300
Michael can convert approximately $53,550 to fill the 12% bracket: the remaining $3,150 of his standard deduction absorbs some conversion income tax-free, then $12,400 falls in the 10% bracket and $38,000 in the 12% bracket, at an average federal rate of approximately 10.8%.
Federal tax on $53,550 conversion: ~$5,800
Georgia tax (4.99%): ~$2,820 (after $12,000 state deduction)
Opportunity: Converting at a combined 16.2% rate now avoids future withdrawals at potentially 22-24% federal + 4.99% Georgia = 27-29%. Over 20 years of RMDs, this strategy could save $150,000+ in taxes.
Example 3: High Earner Managing NIIT
Sarah, a software executive in Atlanta, has the following 2026 income:
- Salary: $280,000
- Qualified dividends: $25,000
- Long-term capital gains: $75,000
Analysis:
- Total MAGI: $380,000 (well above $200,000 NIIT threshold)
- Net investment income: $100,000
- MAGI above threshold: $180,000
- NIIT applies to lesser of $100,000 or $180,000: $100,000
- NIIT cost: $100,000 × 3.8% = $3,800
Federal tax on investment income:
- Capital gains: $75,000 at 15% = $11,250
- Qualified dividends: $25,000 at 15% = $3,750
- NIIT: $3,800
- Total federal on investments: $18,800 (18.8% effective rate)
Key insight: Sarah's investment income faces an effective federal rate of 18.8% (15% + 3.8% NIIT), not the base 15%. Adding Georgia's 4.99%, her total rate on investment income is approximately 23.8%.
Example 4: Senior Couple Maximizing the New Deduction
Robert and Helen, both 68, live in Savannah with the following 2026 income:
- Social Security: $52,000
- Pension: $45,000
- Traditional IRA withdrawals: $35,000
- Total gross income: $132,000
Federal calculation:
- Taxable Social Security (85% of $52,000): $44,200
- Pension + IRA: $80,000
- Gross taxable: $124,200
- Standard deduction: $32,200
- Additional for age (2 × $1,650): $3,300
- Senior bonus deduction: $12,000 (full amount, MAGI under $150,000)
- Total deductions: $47,500
- Federal taxable income: $76,700
Federal tax: Approximately $8,580 (11.1% effective rate on gross taxable)
Georgia calculation:
- Georgia taxable: $80,000 (pension + IRA; GA doesn't tax SS)
- GA standard deduction: $24,000
- GA taxable: $56,000
- Georgia tax: $56,000 × 4.99% = $2,794
Total tax burden: $11,374 on $132,000 gross income = 8.6% effective combined rate. The senior bonus deduction saves this couple approximately $2,640 in federal taxes annually.
Key Takeaways
The 0% capital gains bracket applies to lower taxable incomes. Married filers with taxable income under $98,900 (including gains) pay zero federal tax on long-term capital gains. Some investors consider realizing gains during low-income years, such as early retirement before Social Security begins, to take advantage of this rate.
The NIIT adds 3.8% for high earners, and its thresholds aren't indexed. Investment income faces a maximum federal rate of 23.8% for those above the MAGI thresholds. As these thresholds remain fixed while incomes grow, more taxpayers become subject to this additional tax each year.
Georgia's flat 4.99% rate simplifies state calculations. Unlike the federal system, Georgia offers no preferential treatment for capital gains or dividends, so all income faces the same rate. HB 463 (signed May 2026) authorized 0.125% annual reductions toward a 3.99% floor, putting Georgia on a path to one of the lowest flat-rate income taxes in the nation.
The new senior bonus deduction significantly benefits retirees. The $6,000 ($12,000 for couples) additional deduction for those 65+ effectively shields more retirement income from taxation. Combined with the increased standard deduction, a married couple over 65 can have nearly $48,000 in tax-free income before any itemized deductions.
Marginal rates matter for planning, but effective rates matter for outcomes. Understanding how income stacks through the brackets, and where you have room before hitting the next bracket, enables precise tax planning for Roth conversions, gain harvesting, and income timing decisions.
Bottom line: The 2026 tax landscape rewards strategic income management. Whether you're harvesting gains in the 0% bracket, executing Roth conversions during gap years, or maximizing the senior bonus deduction, understanding these rates and thresholds is essential for minimizing your lifetime tax burden.
Related Planning Tools
Use these tools to apply tax rate knowledge to your specific situation:
Roth Conversion Guide
Strategic approaches to converting Traditional IRAs during low-tax years
IRMAA Guide
How income affects Medicare premiums and planning strategies
Tax-Loss Harvesting Guide
Offset gains with losses to minimize capital gains taxes