Tax Planning

Inflation Adjustments for Tax Year 2026 under the U.S. One, Big, Beautiful Bill

The IRS has announced inflation-adjusted figures for 2026 affecting standard deductions, tax brackets, AMT, credits and more—vital for anyone planning ahead.

By NomadicTax Research Team • 5-8 min read • November 23, 2025

## Overview The IRS released **Revenue Procedure 2025-32** on October 9, 2025, outlining inflation adjustments for over 60 tax code provisions for tax year 2026.([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 adjustments reflect changes enacted under the One, Big, Beautiful Bill (OBBB), ensuring taxpayers have updated thresholds for deductions, credits, and marginal tax brackets.([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)) Below are key areas of change, with actionable insights to help taxpayers and planners. --- ## Key Changes for Tax Year 2026 - **Standard Deduction Increases**: For married couples filing jointly: **$32,200** (up from $31,500); for single filers: **$16,100**; for heads of household: **$24,150**.([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 Brackets**: The income thresholds for the 10%, 12%, 22%, 24%, 32%, 35%, and 37% rates are adjusted upward to reflect inflation. For example, 35% rate now applies above $256,225 for single filers, up from previous levels.([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 (AMT) Exemption**: Unmarried individuals’ AMT exemption is now **$90,100**, phasing out beginning at $500,000. For married individuals filing jointly: exemption phases out at $1,000,000.([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)) - **Estate Tax Exclusion**: Basic exclusion amount rises to **$15,000,000** for estates in 2026.([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)) - **Customary Credits and Exclusions**: - *Foreign Earned Income Exclusion*: Up to **$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)) - *Earned Income Tax Credit* (with three or more qualifying children): maximum credit is **$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)) - *Adoption Credit*: Up from $17,280 to **$17,670**, refundable portion now $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)) --- ## Why This Matters & Actionable Takeaways ### For Individuals - **Income and Deduction Planning**: If you were near a higher tax bracket in 2025, these adjustments may keep you in a lower bracket in 2026 for the same income—consider income shifting or deferral strategies accordingly. - **Retirement Contributions**: For those using IRA or 401(k) contributions to reduce taxable income, the new standard deduction means fewer itemizers—evaluate whether your deductions still exceed the larger standard deduction. - **Estate & Gift Planning**: With the estate tax exclusion rising, high net-worth individuals may have room for gifts or transfers without triggering estate tax. ### For Tax Professionals & Businesses - **Payroll Withholding**: Employers should update withholding tables to account for higher standard deductions and brackets so that employees are not overwithheld. - **Accounting Periods & Reporting**: Companies using fringe benefits (parking, transportation) or other indexed provisions must reflect updated limits in their reporting and benefits administration.([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)) --- ## Example Scenarios | Scenario | 2025 vs 2026 Effect | |---|---| | Single filer with taxable income of $200,000 in both years | Might fall into 32% bracket in 2025; in 2026 threshold for 32% moves higher, possibly saving marginal tax rate on some income | | Married couple with three children claiming EITC | The credit rises slightly, offsetting inflation—still helpful, especially for lower to moderate incomes | | Family adopting a child | Adoption expenses cap increases, and higher refundable portion may help those with lower income or tax liability | --- ## Final Thoughts These inflation-based adjustments are automatic but critical. **Plan early in late 2025** to take advantage of updated thresholds. Review withholding, itemized deductions, consideration for estate planning—all with fresh parameters. While they don’t reshape tax law, hyuge changes won’t appear—but these small shifts mean dollars saved and surprises avoided.