Will Tax Rates and the Government Shutdown Affect Your 2026 Financial Planning?
Change is in the air every fall – not just in the leaves and weather, but in your financial planning.
At this time of year, the federal government announces some important rate adjustments that affect tax planning and retirement benefits for the year ahead.
And complicating matters this fall is a government shutdown that has many seniors worried about the benefits and services that they’ve earned, and that they rely on.
On today’s show, we answer questions from some very astute listeners in the Keen on Retirement audience who are already looking ahead and wondering what they need to prepare for as we move towards the end of the year.
1. "I've been reading about the new cost-of-living adjustments that will apply to the 2026 tax brackets. What does that actually mean for my taxes? And will most people really notice a difference in what they owe?"
Every year, the IRS adjusts more than 60 tax provisions to account for inflation. This cost-of-living adjustment helps to prevent "bracket creep," which would occur if inflation, rather than an increase in income, bumped people into a higher tax bracket.
However, when the IRS makes these adjustments, they don't change the tax rates, they change the income ranges that fall under each bracket. So, per the One Big Beautiful Bill Act, we still have seven brackets. But the OBBBA also gives the two lowest brackets (10% and 12%) a 4% inflation adjustment, versus 2.35% for the other five brackets ( 22%, 24%, 32%, 35%, and 37%).
Here's how the brackets will break down for tax year 2026:
37%
Single filers earning over $640,600
Married couples filing jointly earning over $768,700
35%
Single filers earning over $256,225
Married couples filing jointly earning over $512,450
32%
Single filers earning over $201,775
Married couples filing jointly earning over $403,550
24%
Single filers earning over $105,700
Married couples filing jointly earning over $211,400
22%
Single filers earning over $50,400
Married couples filing jointly earning over $100,800
12%
Single filers earning over $12,400
Married couples filing jointly earning over $24,800
10%
Single filers earning $12,400 or less
Married couples filing jointly earning $24,800 or less
We also know that the standard deduction for 2026 will be $16,100 for single filers and $32,200 for married couples filing jointly.
Finally, here are the long-term capital gains tax rate brackets for tax year 2026:
0%
Single filers earning less than $49,450
Married couples filing jointly earning less than $98,900
15% Rate
Single filers earning over $49,450
Married couples filing jointly earning over $98,900
20% Rate
Single filers earning over $545,500
Married couples filing jointly earning over $613,700
To circle back to the listener's question, I don't think these adjustments are major. But be sure you talk to your financial advisor about what your projected income could be in 2026 and some strategies like tax-loss harvesting that might be beneficial to your portfolio and your tax liability.
2. "I am about to claim Social Security. Should I be worried about not receiving my Social Security with the government shutdown?"
Nope.
The federal budget is divided into two main categories: "discretionary" spending and "mandatory" spending.
A government shutdown freezes discretionary spending, which is what Congress has to approve each year. Things like national parks, science and health care programs, and transportation fall under this category.
Social Security and Medicare fall under mandatory spending. These programs are funded by their own revenue sources and are legally required to continue paying benefits, regardless of whether Congress has passed a budget.
But while your checks should keep coming, if you need to visit your local Social Security office or call in with a question, you might have longer waiting times due to the shutdown limiting staffing. Social Security's very informative website shouldn't be affected. And you can always call up Keen Wealth if you have a planning question about your benefits.
3. "Medicare open enrollment is happening now, but I am already on Medicare. Is there anything that I need to do?"
During the annual Open Enrollment period, Medicare beneficiaries can review their current coverage and, if they want, switch from traditional Medicare (Part A) to a Medicare Advantage Plan (Part C), change their current Medicare Advantage Plan, and/or change their prescription drugs coverage (Part D).
This year, Open Enrollment runs from October 15 to December 7, 2025, for coverage starting in 2026.
If you're happy with your current coverage, no, you don't need to do anything.
But you should review your Medicare plan and any changes to your health care needs every year.
Pay particular attention to Part D prescription drug coverage. Even though some Part D costs are projected to go down next year, the list of prescriptions that individual plans cover and how much of the prices they cover ("formularies") can change quite a bit from one year to the next.
Better yet, meet with a Medicare specialist who can help you review all of your options.
Get Ready for 2026
Whatever is changing in the world, and more importantly, in your life, your confidence in your financial plan should never change.
Before we hit the holiday rush, schedule your year-end checkup with Keen Wealth. There may be some time-sensitive moves worth considering before we flip the calendar that could set you up for success in 2026.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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