Tax Planning
Maximizing the Value of Tax Inflation Adjustments in TY-2026
Changes to standard deductions, tax brackets, and credits for tax year 2026 offer planning windows now—here’s how to use them to reduce your liability.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## What’s New for 2026 Under the One, Big, Beautiful Bill (OBBB)
- The standard deduction increases for tax year 2026 to **$32,200 for married filing jointly**, **$16,100** for single 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))
- Marginal tax rates remain topped at **37%**, though thresholds have shifted upward—e.g., 35% starts at $256,225 for singles. ([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 alternative minimum tax (AMT) exemption and phase-out amounts have also been adjusted higher. ([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 basic exclusion rose from **$13,990,000 to $15,000,000**. Adoption credit increased; other credits like employer-provided childcare have seen enhancements. ([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))
## How to Use These Adjustments for Tax Planning
### 1. Revisit Withholding and Estimated Payments
With higher thresholds and deduction amounts:
- Estimate whether your withholding is now too high or too low.
- Use updated IRS withholding tables to avoid surprises at tax time.
### 2. Shift Income / Expenses
- If you itemize deductions like mortgage interest, charitable contributions, or medical expenses that exceed thresholds, the higher standard deduction might reduce the benefit—consider bunching deductions.
- If you expect large income (e.g., bonus, sale), timing it across years might keep you in lower brackets under the new thresholds.
### 3. Gift and Estate Planning
- With the higher estate exclusion, you may now exclude up to **$15 million** per decedent; consider whether gifting now makes sense.
- Use trusts and other vehicles to shelter future growth, especially if values are rising rapidly.
### 4. Family Benefit Credits and Employer-provided Benefits
- Employer childcare credit rose significantly—employers and employees should review eligibility and documentation. ([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))
- Flexible spending accounts, Medical Savings Accounts, health care FSA contributions all increased—adjust your contributions accordingly. ([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))
## Practical Examples
- **Example**: A married couple filing jointly with two kids now has a standard deduction of **$32,200**, up from $31,500—saving them an extra $700 in taxable income.
- **Example**: An individual in the 35% bracket gets bumped into that bracket now at $256,225 instead of lower—for someone expecting a large bonus, deferring $10,000 of income might mean staying at 32% rather than paying 35%.
## Action Steps Before Year-End
- Recompute tax projections using 2026 thresholds if you have high income or deductions.
- Make charitable donations or large deductible business expenses before changeovers in law or tax year.
- Consider revising estate plans or gifting strategies before valuations shift further.
Using inflation adjustments effectively can reduce tax liability now and lay groundwork for future planning.