Tax Planning
How the One, Big, Beautiful Bill Changes Standard Deductions & Key Tax Brackets for 2026
Understanding the major inflation adjustments in the U.S. tax code under the One, Big, Beautiful Bill: standard deduction, brackets, AMT, and more.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## What is the One, Big, Beautiful Bill (OBBB)?
Signed into law on **July 4, 2025**, the OBBB introduced sweeping changes to the U.S. tax code that affect everything from deductions to workplace benefits. It’s designed to reduce tax burdens through inflation adjustments and introduce new deductions for working Americans.([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
## Top Inflation-Driven Changes for Tax Year 2026
Here are the key adjustments for tax year 2026 that affect individuals when they file 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))
| Item | 2025 Amount | 2026 Amount | What This Means |
|---|---|---|---|
| Standard Deduction (Married Filing Jointly) | $31,500 | **$32,200** | More of your income goes untaxed |
| Standard Deduction (Single) | $15,750 | **$16,100** | Helps individual filers avoid tax on more income |
| Head of Household Standard Deduction | $23,625 | **$24,150** | Supports single parents or non-spousal caregivers |
| Alternative Minimum Tax Exemption (Single) | – | $90,100 | Helps reduce AMT liability for moderate-income filers |
| Estate Tax Exclusion | $13,990,000 | **$15,000,000** | More estates now escape estate taxes |
## Other Adjustments to Know
- **Earned Income Tax Credit (EITC)**: Maximum increases to $8,231 for filers with three or more children.([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))
- **Qualified Transportation Fringe & Parking Benefits**: Monthly limits increase—beneficial for commuters.([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))
- **Health FSAs & MSAs**: Contribution limits rise; deductibles increase slightly.([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**: Now set at $132,900, helping U.S. expats shield more income overseas.([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 These Changes Affect You
- **Reduced tax liability**: Bigger deductions and higher limits mean more income avoids tax.
- **Lower bracket creep**: With adjusted thresholds, you’re less likely to be pushed into a higher bracket due to inflation.
- **Estate planning updates**: Higher exclusion gives estate planners breathing room.
- **Benefits for expats and gig workers**: Foreign income and fringe benefits adjustments offer key advantages.
## Practical Tips & Examples
- **Check standard deduction eligibility**: If filing jointly, using the new amounts could mean thousands in tax savings.
- **Self-employed/gig economy workers**: Track Group benefits like commuting costs carefully—they’re now more impactful.
- **Seniors**: OBBB also introduced **additional deductions for those 65 or older**. If you’re 65+ on December 31, 2025, this could increase your deductions significantly.([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
## Actionable Advice
- Use updated 2026 wage withholding tables to avoid surprises in refunds or liabilities.
- Review retirement and savings plans—higher contribution limits might allow you to save more tax-efficiently.
- If involved in estate planning, revisit trusts and wills in light of the new $15 million estate exclusion.
- Expatriates should update their foreign income reporting strategies.
## Final Thought
These inflation adjustments under the OBBB provide meaningful relief and planning opportunities for a broad swath of taxpayers—from working individuals to seniors and self-employed professionals. Staying informed and updating your tax strategy now can deliver substantial savings for the 2026 tax year.