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)
- Marginal tax rates remain topped at 37%, though thresholds have shifted upward—e.g., 35% starts at $256,225 for singles. (irs.gov)
- The alternative minimum tax (AMT) exemption and phase-out amounts have also been adjusted higher. (irs.gov)
- 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)
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)
- Flexible spending accounts, Medical Savings Accounts, health care FSA contributions all increased—adjust your contributions accordingly. (irs.gov)
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.