Tax Planning

Maximizing the New Standard Deductions & Inflation Adjustments for 2026

With the ‘One, Big, Beautiful Bill’ now in effect, major inflation-led changes are impacting standard deductions, tax brackets, and eligibility thresholds—key for anyone planning their 2025-2026 tax move.

By NomadicTax Research Team • 5-8 min read • November 15, 2025

## What’s changing under inflation adjustments for tax year 2026? The IRS released its latest inflation adjustments effective for tax year 2026 (returns filed in 2027) as part of the One, Big, Beautiful Bill (OBBB). Among the over 60 provisions updated, these are the standouts: ([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** rises significantly: $32,200 for married filing jointly; $16,100 for singles or married filing separately; and $24,150 for heads of household. ([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)) - **Tax brackets** adjust upward to reflect inflation, with the top rate of 37% remaining for income above $640,600 (single) and $768,700 (married filing jointly). ([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)) - **Other threshold increases** include: foreign earned income exclusion ($132,900), EITC maximum for three or more children ($8,231), and benefits like the QPA under the No Surprises Act will also be indexed. ([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 adjustments matter for tax planning For individuals and families, that means more **income sheltered** by standard deductions and delayed entry into higher tax rates. For example: - A filer's income may increase without raising their marginal tax rate thanks to bracket creep protection. - Higher foreign earned income exclusion helps digital nomads working abroad. - Employers and employees using tax-advantaged benefits like health FSAs, adoption credits, and transportation have more room before phase-outs start. ([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)) ## Actionable steps you can take now 1. **Estimate your tax bracket for 2026** using the new thresholds—avoid surprises where income gets taxed more heavily. 2. **Bunch deductions** if they’re close to standard deduction limits this year: medical, charitable contributions, etc. 3. **Review retirement contributions:** increases to limits (e.g. § 179 expensing, etc.) may allow greater current-year deductions or tax deferral. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai)) 4. **Check your eligibility** for credits like adoption, foreign income, and health plan cost sharing, which may have higher ceilings. ## Real world example Suppose you’re a head of household filer making $90,000 in taxable income. Under the new 2026 brackets, you now have a larger gap before reaching the 32% bracket—this means your last dollars earned face a lower marginal increase compared to prior years. By maximizing retirement contributions, you may stay in the 24% bracket rather than slipping into 32%. By keeping up with these annual inflation adjustments, taxpayers can make smarter decisions ahead of upcoming filing seasons.