Tax Planning
Case Study: How the US ‘One, Big, Beautiful Bill’ Inflation Adjustments Impact Tax Planning for Families
Increases to standard deductions, EITC, and foreign earned income exclusion reshape US tax strategies for 2026 — here’s how families can adjust.
By NomadicTax Research Team • 5-8 min read • April 11, 2026
## What are the Key Inflation Adjustments under OBBB for Tax Year 2026
The *One, Big, Beautiful Bill* (OBBB) introduced inflation-indexed updates affecting over 60 U.S. tax provisions. Important changes include:
- The **standard deduction** for married filing jointly increased to **$32,200**, for single and married filing separately to **$16,100**, and for heads of households to **$24,150**. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- **Alternative Minimum Tax (AMT)** exemption is now **$90,100** for unmarried individuals (phasing out at $500,000) and **$140,200** for married filing jointly. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- **Foreign Earned Income Exclusion (FEIE)** rises to **$132,900**. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- **Estate Tax Exclusion Amount** is now **$15,000,000** for decedents in 2026. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- Enhanced credits such as **Adoption Credit** (max expenses creditable up to **$17,670**; refundable portion $5,120) and higher limit for **Employer-Provided Childcare Tax Credit** (max from $150,000 to $500,000 or $600,000 for small business). ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
## How Families Should Adjust Their Tax Planning
- **Reevaluate withholdings or estimated payments**: With higher standard deductions and expanded credits, many taxpayers may face lower taxes owed, so updating paycheck withholding might prevent over-payment.
- **Use FEIE wisely for overseas income**: Families living abroad or with income from foreign sources may see increased benefit; if your income barely exceeds new thresholds, consider timing income or recognizing deductions carefully.
- **Estate planning recalibration**: Those expecting large estates need to revisit their estate planning, as the exclusion went up significantly—potentially enabling larger gifts or transfers without triggering federal estate tax.
- **Childcare and adoption cost timing**: If adoption costs or childcare expenses are planned around taxable events, aligning timing to benefit from increased credit maxima can increase savings.
## Practical Examples
**Scenario A – Family Abroad**: Maria lives in Costa Rica with her husband and two kids. She earns $130,000 abroad. Under the new FEIE, her foreign earned income exclusion is $132,900—so she may fully exclude her salary. However, she should ensure she qualifies (bona fide residence or physical presence tests) to rely on FEIE.
**Scenario B – Estate Planning**: The Johnsons expect to pass down $14 million estate to their children. Under 2025 thresholds, more would be taxable; with the $15 million exclusion in 2026, their estate might fall below taxable threshold—presenting opportunity to revise gift giving strategies.
## Actionable Steps Going Forward
- Review your 2025 tax return outcomes and simulate 2026 with updated thresholds to see where your liabilities shift.
- Ensure paychecks reflect new standard deduction and tax rate thresholds—using updated IRS withholding estimator.
- For cross-border families, confirm eligibility for FEIE or foreign tax credits; seek advice on dual taxation treaties.
- Update estate and gifting strategy, possibly executing gifts before thresholds change or aligning with new limits.
**Conclusion**: The inflation adjustments under OBBB for 2026 create real opportunities for families to reduce tax liabilities. Being proactive—adjusting withholding, aligning income timing, and updating estate plans—will maximize benefits.