2026 tax brackets, standard deductions, capital gains rules, and 7 legal strategies to keep more of your money — covering US federal and UK PAYE.
The 2026 US tax year brings a modest increase in income thresholds due to inflation adjustment, while the 2026/27 UK tax year introduces notable changes to dividend tax rates and maintains the frozen income tax thresholds through April 2031.
2026 US standard deduction: $16,100 (single) | $32,200 (married filing jointly) | $24,300 (head of household). The standard deduction is the most commonly used — 90% of filers take it instead of itemising.
UK 2026/27 key change: dividend tax rates rose — the basic rate climbed from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. Dividends inside an ISA remain completely tax-free, making the £20,000 ISA allowance more valuable than ever.
US deductions and credits: The mortgage interest deduction applies to interest on up to $750,000 of qualifying debt — on a $350,000 mortgage at 6.8%, that is roughly $22,000 of deductible interest in year one. The Child Tax Credit remains $2,000 per qualifying child under 17. The Earned Income Tax Credit ranges from $632 to $7,830 depending on income and family size.
401(k) deduction impact: Contributing the full $24,500 to a pre-tax 401(k) at a 22% marginal rate saves $5,390 in federal income tax — before considering state tax savings. The combined 401(k) + IRA + HSA limit for a 50-year-old can shelter over $40,600 from taxation.
UK reliefs: Personal pension contributions receive tax relief at your marginal rate — a £10,000 pension contribution costs a higher-rate taxpayer only £6,000 after 40% relief. The Marriage Allowance transfers £1,260 of personal allowance, saving up to £252/year. EIS investments provide 30% income tax relief on up to £1,000,000 invested.
Your gross salary and your take-home pay are very different numbers. At $75,000 gross (US, single filer), the deductions are: federal income tax ~$8,000, FICA (SS + Medicare) $5,738, and estimated state tax $3,750 — leaving roughly $57,500 annual take-home, or $4,792/month. That is 23% less than gross.
These are estimates assuming standard deductions only. Pre-tax pension contributions, FSA/HSA contributions, and other salary sacrifice arrangements all increase take-home pay by reducing taxable income.
Capital gains tax applies to profit from selling assets. In the US, the rate depends entirely on how long you held the asset and your total income. Holding for more than one year qualifies for the preferential long-term rates of 0%, 15%, or 20%.
In the UK, the annual CGT exempt amount is £3,000 in 2026. Gains above this are taxed at 18% (basic rate) or 24% (higher rate) for residential property, and 10% or 20% for other assets including shares. Gains inside an ISA are completely exempt.
1. Max your 401(k) — At 22%, contributing $24,500 saves $5,390 in federal tax annually. At 24%, it saves $5,880. The highest-impact action for most US workers.
2. Maximise your HSA — Triple tax advantage: deductible in, tax-free growth, tax-free out for medical. The $4,400/$8,750 limit shields meaningful income, and the money never expires.
3. Tax-loss harvesting — Sell losing investments to offset gains. US investors can deduct $3,000 of net losses against ordinary income annually, with unlimited carry-forward.
4. Bunch charitable deductions (US) — Combine two years of donations to clear the standard deduction threshold in alternating years, then take the standard deduction the other year.
5. Salary sacrifice (UK) — Exchange salary for pension contributions, saving both income tax and NI. A £10,000 salary sacrifice at 40% tax + 2% NI saves £4,200 annually.
6. Use your ISA allowance (UK) — £20,000 annually into a Cash or Stocks & Shares ISA produces completely tax-free income and gains. Critical now that dividend tax rates have risen.
7. Transfer income to a lower-earning spouse — The marriage allowance (UK: £252/year) or spousal IRA contribution (US) can meaningfully reduce household tax liability with minimal complexity.