Tax Planning
Maximize Your Returns: Strategic Tax Planning in Light of OBBBA Changes
Discover how the One Big Beautiful Bill Act’s (OBBBA) inflation adjustments and new provisions for 2025–2026 can be leveraged for smarter tax planning.
By NomadicTax Research Team • 5-8 min read • March 21, 2026
## What taxpayers need to know about OBBBA inflation adjustments
The One Big Beautiful Bill Act (OBBBA), passed in mid-2025, brought sweeping changes. IRS announced the 2026 inflation adjustments which impact **standard deduction**, **EITC**, **tax brackets**, **foreign earned income exclusion**, and more. For example, in tax year 2026:
- The standard deduction will rise to **$32,200** for married filing jointly, **$16,100** for single filers; heads of households will see **$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))
- The foreign earned income exclusion increases to **$132,900**, up from $130,000 in 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))
- Income tax brackets shift upward to reflect inflation, keeping taxpayers from falling into higher rates unnecessarily. ([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))
## Planning tactics for different taxpayer profiles
Here’s how you can put those changes to work: several strategies depending on your situation.
| Situation | Possible Strategy |
|---|---|
| Married couple who itemize in states with high SALT | Compare whether taking **standard deduction** or itemizing is more beneficial now. SALT cap changes may affect this balance. |
| Digital nomads / U.S. expats | With a higher foreign earned income exclusion, more of your income earned abroad may be protected from U.S. tax. If you’re near thresholds, you may consider structuring income or timing away to stay within safe zones. |
| Seniors and families | OBBBA introduced new deductions and credits—like senior deduction, charitable deduction for non-itemizers, tip/overtime income deductions. Planning charitable giving or tip income receipt can yield extra value. |
## Key actionable insights for 2025 & early 2026
- **Time lumpy income or expenses**: If possible, defer income or prepay deductions if you expect to be in a higher bracket or see inflation indexing shifts.
- **Leverage non-itemizer deductions**: New option to deduct up to **$1,000 ($2,000 married)** for cash charitable contributions without itemizing may spur strategic giving decisions.
- **Review tax-benefit thresholds**: Phase-outs for credits, AMT exemption phasedowns, etc., are indexed; make sure you’re clear which band you fall into.
- **Watch your gift planning**: Gift exclusion amounts remain static or move slightly; overplanning here without awareness can result in unexpected filing.
## Illustrative examples
- A married couple filing jointly with income near the top bracket in 2025 may benefit more from timing income such that tax falls into **35% rather than 37% bracket**, especially since bracket thresholds are higher for 2026.
- An expat earning $135,000 abroad in 2026 could exclude **$132,900** of that via foreign earned income exclusion—much more favorable than in previous years.
- A taxpayer who gives $1,000 in cash to a public charity in 2025, but doesn’t itemize, now gets that deduction under OBBBA—that’s a new tax benefit they couldn’t claim earlier.
## Pitfalls to avoid and timing concerns
- Some credits or deductions carry sunset or expiration dates—**permanent vs temporary** under the new law.
- Don’t assume all items are inflation-adjusted; for example, personal exemptions remain eliminated. ([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))
- Beware of relying on unvested or expected rule changes; make sure you check effective dates (some changes take effect Jan 1, 2026 or later).
By staying alert to the inflation adjustments and strategic opportunities under OBBBA, taxpayers can both minimize liability and avoid pitfalls—especially for tax years 2025 and 2026.