Tax Planning
How the IRS Inflation Adjustments for 2026 Affect Your Standard Deduction and Credits
For tax year 2026, the One, Big, Beautiful Bill and IRS inflation adjustments bring significant changes to standard deductions, credits, and thresholds—find out what these mean for your tax planning.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## Understanding the 2026 Inflation Adjustments
The IRS recently released **Revenue Procedure 2025-32**, detailing inflation-driven updates affecting over 60 tax provisions for tax year 2026, including changes arising from the *One, Big, Beautiful Bill (OBBB)*. These adjustments impact the standard deduction, marginal tax rates, estate tax exemption, adoption credit, and more. ([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 That Stand Out
| Provision | New Value for TY 2026 | Implications |
|---|---|---|
| Standard Deduction (MFJ) | $32,200 | Helps reduce taxable income for married couples filing jointly. MFJ already increased to $31,500 for 2025. ([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))|
| Standard Deduction (Single) | $16,100 | Beneficial for single filers; up from the 2025 level under OBBB. ([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))|
| Marginal Tax Rates | Unchanged top rate at 37%; income thresholds slightly adjusted for lower brackets | Impacts marginal planning for both individuals and married couples. ([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 Basic Exclusion | $15,000,000 per person | Boosts estate planning opportunities and reduces exposure for larger estates. ([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))|
| Adoption Credit | Up to $17,670 | More benefit for adoptive families; includes refundable portion of up to $5,120. ([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 | $132,900 | Important for American expats or digital nomads—more income may now be excluded. ([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))|
## Tax Planning Tips Based on the Adjustments
- **Reevaluate withholdings**: With higher deductions, some taxpayers may be overwithholding. Use the IRS Withholding Estimator to adjust accordingly.
- **Year-end moves**: If you expect income to push you into a higher rate bracket, consider accelerating deductions or altering timing of income/gains. Using retirement plans or harvesting losses might help.
- **Estate planning**: Estates that might have been taxable before could now fall below the threshold—review your estate plan with updated numbers.
- **Expats / Nomads**: With the higher foreign earned income exclusion, you might exclude more income from U.S. taxation—plan travel, assignments, and income recognition around these thresholds.
- **Adoption planning**: Families considering adoption should time qualified expenses to maximize the adoption credit in 2026.
## Example Scenario
Suppose Jane (single) and Paul (married filing jointly) both expect similar income in 2026. With the standard deduction now at **$16,100** (single) and **$32,200** (MFJ):
- Jane’s taxable income decreases by $16,100 versus prior rules, which could shift some income into a lower bracket.
- Paul gets double that reduction, which could reduce tax exposure significantly if they were near a bracket threshold.
If Paul also plans to adopt in mid-2026 and incurs $17,000 in qualified adoption expenses, he can claim nearly the full adoption credit and benefit from the full refundable portion.
## Bottom Line
These inflation adjustments aren’t just numbers—they can affect your tax liability, planning strategies, and financial decisions. Combining them with provisions in the OBBB law offers opportunities to reduce taxes, plan for estate transfers, and time certain financial actions to maximize deductions and credits.
---
*Category: Tax Planning | taxHome: US | author: NomadicTax Research Team | readTime: 5-8 min*