Tax Planning
How the One, Big, Beautiful Bill Transformed Annual Inflation Adjustments for Tax Year 2026
The OBBB introduced sweeping inflation updates affecting standard deductions, AMT exemptions, estate tax limits, and more—understanding these shifts can optimize your tax planning this year.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## What Exactly Changed with Tax Year 2026?
The One, Big, Beautiful Bill (OBBB), signed into law on July 4, 2025, affects how many dollar-limited tax items will be adjusted for inflation in 2026. The IRS issued **Revenue Procedure 2025-32** detailing several of these notable updates. ([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))
Here are some key adjustments:
| Tax Item | 2025 Amount | 2026 Adjustment |
|---|---|---|
| Standard Deduction (Married Filing Jointly) | $31,500 | $32,200 ([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) | $15,750 | $16,100 ([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)) |
| EITC (≥3 children) Maximum | $8,046 | $8,231 ([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 Exemption (Unmarried) | — | $90,100 ([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 | $130,000 | $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)) |
| Basic Estate Tax Exemption | $13,990,000 | $15,000,000 ([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)) |
These are just a few; over **60 tax provisions** were adjusted. ([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))
## Why These Changes Matter
- **Reduces tax liability**: Higher standard deductions and increased exclusion thresholds lower taxable income for many.
- **Helps high-income individuals**: More generous AMT exemptions mean fewer people getting caught in the Alternative Minimum Tax net.
- **Supports international workers**: Foreign earned income exclusion and gift exclusions help those navigating income across borders.
## Actionable Tax Planning Moves
- Review withholdings now—rising deductions can shift your withholding to the point of overpayment if not updated.
- If you're planning charitable giving or major financial moves in 2026, account for higher thresholds for estate and gift taxes.
- For self-employed people or international workers, evaluate how increased exclusions and AMT changes affect your business structure or income splitting.
## Example Scenarios
- **Married couple**: In 2025, the married filing jointly deduction was $31,500; in 2026, it’s $32,200. That $700 increase reduces taxable income.
- **Foreign earner**: Someone earning foreign salary can exclude up to $132,900 in 2026 instead of $130,000 in 2025. That’s nearly $3,000 more sheltered from U.S. tax.
## Takeaway
This OBBB-driven update for tax year 2026 offers broad relief and features significant inflation indexing across dozens of tax code items. Whether you're filing as an individual, planning for international earnings, or preparing an estate, these changes underline a strong need to revisit your tax strategies now. Identify where you’re impacted and adjust budgets, withholding, or estimated tax payments accordingly before 2026 rolls in.