What’s Changed in Tax Year 2026
The IRS has released Revenue Procedure 2025-32, setting the inflation-adjusted amounts for over 60 tax provisions for tax year 2026. These changes—part of the One, Big, Beautiful Bill (OBBB)—affect standard deductions, tax brackets, major credits, and more.(irs.gov)
Key Adjustments That Matter Most
| Item | 2025 Amount | 2026 Amount | Impact |
|---|---|---|---|
| Standard Deduction (Single) | $15,750 | $16,100 | More income shielded for individuals/generally low wage earners (irs.gov) |
| Married Filing Jointly | $31,500 | $32,200 | Helps couples with modest gains in deductions (irs.gov) |
| Head of Household | $23,625 | $24,150 | Increasing income relief for single parents or caregivers (irs.gov) |
| Foreign Earned Income Exclusion | $130,000 | $132,900 | Crucial for expats and nomads dealing with double taxation concerns (irs.gov) |
| Gift Tax Exclusion (Non-citizen Spouse) | $190-ish thousand | $194,000 | May affect estate planning and transfers across borders (irs.gov) |
Actionable Tax Planning Tips
- Review taxable investment decisions now, especially if you expect significant income in early 2026. These thresholds impact when you cross into higher tax brackets.
- For digital nomads, the boosted Foreign Earned Income Exclusion (FEIE) can mean significant savings. Keep detailed records of travel and domicile to safely claim it.
- Small business owners should examine whether adjustments in fringe benefit limits or credits (like employer-childcare or transportation fringe benefits) create planning windows for major deductions.
Drafted Changes That Aren’t Moving (For Now)
Inflation indexing doesn’t apply to every benefit. Notable exclusions under OBBB include personal exemptions and phase-out thresholds for certain education credits.(irs.gov) These static rules might bite higher-earning individuals, so plan accordingly.
Example Scenario: Married Couple Earning $90,000
Sarah and Miguel file jointly in 2026, earning $90,000. Under 2025 rules, their standard deduction is $31,500, leaving $58,500 subject to brackets. In 2026, with $32,200, only $57,800 is exposed—yielding around $600 in tax savings, depending on their bracket. Small, but every dollar counts.
Summary: What You Can Do Now
- Use these inflation changes to update withholding, especially toward end of 2025.
- Plan one-off expenses or business decisions around increased allowances before the year begins.
- Digital nomads and estate planners should compare 2025 vs 2026 thresholds to see where it’s optimal to recognize income or gifts.
With these adjustments, many taxpayers will benefit. Understanding them can transform year-end planning into real tax savings, especially during a time of income shifts, economic uncertainty, or structural changes triggered by OBBB.
Category: Tax Planning