BETHLEHEM, Pa. — Workers across the Lehigh Valley and beyond could see slightly larger paychecks this year.
Updated federal income tax brackets take effect in 2026, lowering the amount of income taxed at higher rates for many households.
The Internal Revenue Service adjusts tax brackets periodically to account for wage growth and inflation. For 2026, those adjustments push the income thresholds for each tax rate higher, letting more earnings to be taxed at lower rates before moving into higher brackets.
For single filers, the 10% tax bracket will apply to income up to $12,400, while the 12% bracket will extend up to $50,400. The 22% bracket will not begin until income exceeds that level.
Higher brackets also are adjusted upward, though most taxpayers never reach them.
Because the federal tax system is progressive, the changes do not mean all income is taxed at a lower rate. Instead, only portions of income fall into each bracket.
For 2026 tax rates are:
- 10% for incomes of single individuals with incomes of $12,400 or less ($24,800 for married couples filing jointly)
- 12% for incomes of more than $12,400 ($24,800 for married couples filing jointly)
- 22% for incomes of more than $50,400 ($100,800 for married couples filing jointly)
- 24% for incomes of more than $105,700 ($211,400 for married couples filing jointly)
- 32% for incomes of more than $201,775 ($403,550 for married couples filing jointly)
- 35% for incomes of more than $256,225 ($512,450 for married couples filing jointly)
- 37% for individual single taxpayers with incomes greater than $640,600 ($768,700 for married couples filing jointly).
What it means locally
For many Lehigh Valley residents working full time, the changes could add up to several hundred dollars in federal tax savings over the course of the year.
For example, a single worker earning about $68,000 annually — close to salaries for many professional, health care, education and skilled trade positions in the region — could see roughly $400 more in take-home pay over the year.
Spread across biweekly paychecks, that typically works out to about $15 to $20 per pay period, assuming income and withholding remain the same.
According to the IRS, the “inflation adjustments” can help offset rising costs for housing, utilities and groceries — expenses that have continued to climb for many people.
But as fast as that money comes in, it may leave your bank account just as quickly. That’s because some municipalities have passed or proposed tax increases for 2026.
Some of the increases include:
Whitehall Township, where commissioners approved a $36.7 million budget that includes a real estate tax hike from 3.80 mills to 4.70 mills — an increase of almost 24%.
The increase means the owner of property assessed at $250,000 for tax purposes would pay $225 a year more in property tax, or $28.75 per month.
Salisbury Township, where the 2026 budget proposal calls for a 1-mill tax hike, from 3.77 mills to 4.77 mills, or an increase of 26%.
The increase means the owner of a property assessed at $233,000 would pay $233 a year more in property tax, or a little more than $19 per month.
- Fountain Hill, where the borough’s 2026 budget would raise the tax bill for a home valued at $250,000 from about $2,650 to $2,900, or $20 per month.
Lehigh County Authority also will increase rates in 2026, which it says will go directly toward maintaining and improving the public water and sewer systems.
That will include upgrades to aging infrastructure, including pipes, pumps and treatment equipment.
In Allentown, a typical residential customer using 15,000 gallons of water will see an increase of $74.32 per year, breaking down to $8.58 per quarter, or $6.19 per month (a roughly 7% increase).
Suburban division customers could see an increase of about 4%, or roughly $15.20 per quarter.
No change to Pennsylvania taxes
The federal bracket changes do not affect Pennsylvania’s income tax, which remains a flat 3.07%.
That means any increase in take-home pay for local workers would come from lower federal taxes, not changes at the state level.
What you should do
Most employees do not need to take action to benefit from the new brackets. Employers typically update payroll systems automatically to reflect the changes beginning in January.
However, financial advisers recommend reviewing W-4 withholding forms, especially for workers who have changed jobs, received raises or experienced life changes such as marriage or the birth of a child.
The new federal tax brackets apply to income earned starting Jan. 1, 2026, and will be reflected when residents file their 2026 tax returns in early 2027.
