Tax Planning
How Inflation Adjustments Under the OBBB Affect Your Federal Tax Bill in 2026
Major tax parameters from the One, Big, Beautiful Bill are being indexed for inflation in 2026—this article breaks down what's changing and how it may affect you.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## What Adjustments Are Changing in 2026?
The IRS has released the annual **inflation adjustments** under **Revenue Procedure 2025-32**, reflecting amendments from the One, Big, Beautiful Bill. These apply to tax year **2026** (returns filed in 2027). ([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)) Key changes include:
| Item | 2025 Value | 2026 Value |
|---|---|---|
| Standard Deduction (Single / Married Filing Separately) | $15,750 | $16,100 |
| Standard Deduction (Married Filing Jointly / Surviving Spouses) | $31,500 | $32,200 |
| Heads of Household Deduction | $23,625 | $24,150 |
| Earliest AMT Exemption (Single) | (Varies) | $90,100 |
| Estate Tax Basic Exclusion | $13,990,000 | $15,000,000 |
| Adoption Credit Max (Qualified Expenses) | $17,280 | $17,670 |
Additional adjustments include changes to Earned Income Tax Credit thresholds, foreign earned income exclusion, qualified transportation benefits, and medical savings account limits. ([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))
## Who Benefits Most?
- **Low and middle income taxpayers** will see relief via higher standard deduction and broader deduction applicability as inflation lifts thresholds.
- **Families using tax credits** (EITC, adoption credit) will have slightly more room before phase-outs restrict benefits.
- **Estates and large gifts** will gain more headroom due to higher exclusions, potentially saving estate tax liability for some.
## Practical Tips to Prepare
- If possible, **accelerate or defer income or expenses** to maximize deductions or minimize tax exposure, depending on your income bracket.
- For itemizers, evaluate whether **itemizing still makes sense** given rising standard deduction.
- If planning an estate transfer, explore opportunities while exclusion amounts are highest.
## Example Scenarios
- **Young single professional earning $80,000/year**: Boost in standard deduction helps directly reduce taxable income.
- **Family of four with three children**: EITC maximum rising provides better support.
- **Couple with large estate**: $15 million exclusion opens opportunity that previously had lower cap.
## What to Watch Out For
- Not all items are indexed—some phase-outs or credits remain fixed by statute.
- Tax planning moves (like realizing capital gains or doing large medical expenses) may interact differently with thresholds.
- Watch filing status rules—single vs married jointly can change phase-outs significantly.
**Takeaway**: Inflation is biting, but under OBBB it’s being addressed. These tweaks may seem small individually, but together they shift the tax landscape—plan ahead.