Tax Planning
Maximizing Standard Deductions in the Post-OBBB Tax Era
With the One, Big, Beautiful Bill inflation adjustments for 2026, standard deductions and income brackets have shifted—learn how to plan deductions for married couples, heads of households, and individuals.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## Understanding the New Inflation Adjustments Under the OBBB
The One, Big, Beautiful Bill (OBBB), enacted July 4, 2025 (Public Law 119-21), has introduced major inflation adjustments for tax year **2026** that affect standard deductions, exemption thresholds, and tax brackets. These changes are especially relevant for individual taxpayers and affect how much income is taxed and at which rate. ([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))
For tax year 2026:
| Filing Status | Standard Deduction |
|---------------|---------------------|
| Single or Married Filing Separately | **$16,100** |
| Married Filing Jointly & Surviving Spouses | **$32,200** |
| Heads of Households | **$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 rates remain tiered: 10%, 12%, 22%, 24%, 32%, 35%, and the top rate 37%. The income thresholds for those rates have also moved upward due to inflation. ([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 Tax Items With Adjusted Limits
- **Alternative Minimum Tax (AMT)** exemption amounts rise; phase-out thresholds have also increased. ([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** increases to **$15,000,000** for decedents dying 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))
- **Adoption credit** limit increases to **$17,670** (up from $17,280); refundable portion also 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))
- **Foreign Earned Income Exclusion** – new limit of **$132,900**, up from $130,000. ([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))
## Strategic Tax Planning Tips
1. **Time your deductions and income**
If you expect a spike in income late in 2025, harvest deductible expenses now (charity, medical, etc.) to reduce taxable income before inflation adjustments shift brackets in 2026.
2. **Review filing status decisions**
Moving from Single to Head of Household could yield a larger standard deduction, but you must meet IRS criteria. Married filing jointly often provides larger combined deductions.
3. **Estate planning becomes more flexible**
With the estate tax exclusion up, planners may reassess gifting strategies or trust formations to take advantage of the higher exemption before adjustments in future years.
4. **Monitor phase-outs carefully**
Many credits and itemized deduction benefits begin to phase out at higher income levels. Adjusting AGI via retirement contributions, HSAs, or FSAs may help.
## Practical Example: Married Couple Strategy
Suppose John and Jane, married filing jointly, earn **$90,000** in *tax year 2025*. Their **standard deduction** for 2026 (filing in 2027) will be **$32,200**. If they expect their income to cross into a higher bracket in 2026, they might consider making deductible contributions (charity, IRA, health savings account) in **early 2026** or late 2025 to reduce AGI.
Additionally, with the adoption credit increasing, if they plan to adopt in 2026 and had expenses of, say, $18,000 (qualifying), they can now access more of that credit. Adjusting income to avoid phase-out thresholds might further enhance benefit.
## Action Checklist Before 2026 Ends
- Estimate your 2026 taxable income now, including expected inflation shifts.
- Prepay or defer certain expenses to optimize deductions under the new brackets.
- Evaluate whether itemizing will exceed standard deduction in your case.
- Update retirement and flexible spending plan contributions to leverage new limits.
**Bottom line:** The inflation adjustments under OBBB are significant. Taxpayers should review their filing status, timing of income/expenses, and use all available deductions and credits to adapt to the new landscape.