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) 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)
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.