Tax Planning

Maximizing U.S. Taxes in 2025: Inflation Adjustments & Standard Deductions Demystified

The IRS has released inflation adjustments under the One, Big, Beautiful Bill for Tax Year 2026—raising standard deductions, altering AMT thresholds, and tweaking credits like EITC. Here’s how to plan now to minimize surprises.

By NomadicTax Research Team • 5-8 min read • November 16, 2025

## What’s New in 2026 Inflation Adjustments? The IRS issued **Revenue Procedure 2025-32**, announcing inflation-adjusted figures for over 60 tax provisions—effective for tax year 2026 (returns filed in 2027) under the *One, Big, Beautiful Bill*.([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)) Highlights include: - **Standard Deduction Increases**: Married filing jointly will jump to **$32,200**; single filers to **$16,100**; heads of households to **$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)) - **Alternative Minimum Tax (AMT) Exemptions** grow: $90,100 for single, phase-out starting at $500,000; for married filing jointly, exemption phases out starting at $1,000,000.([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)) - **Estate Tax Exclusion** lifts 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)) - **Earned Income Tax Credit (EITC)** rises slightly for filers with three or more qualifying children—$8,231 max.([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)) - Some benefits, like exclusion from income for gifts to non-citizen spouses, increase.([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 Tax-Planning Tips These adjustments offer planning windows to optimize deductions, credits and filing strategies: **1. Review Filing Status** The jump in standard deduction for married filing jointly is meaningful. If married, compare filing separately vs jointly—especially if one spouse has large deductions, and the other has heavy withholding or high income. Use 2026’s numbers in projections. **2. Time Income and Deductions** If you expect to fall near key thresholds—AMT, EITC, estate tax exclusion—plan to shift income or deductions across years. For example, bunching charitable giving, or accelerating deductible expenses may help, depending on your tax bracket and AMT exposure. **3. Estate & Gift Strategy** With the estate exclusion now $15M, those near that mark may explore gifting during life. Also monitor gift tax exclusion rates where applicable. For non-citizen spouses, the increased gift exclusion helps. **4. For Employers & Tax Pros** Employers should prepare to handle changing credit amounts and withholding tables. Tax professionals can advise clients on these changes well before first 2026 returns are filed. ## Example Scenario **Sam** and **Jamie**, married filing jointly, expect AGI of $300,000 and significant itemized deductions of $25,000 yearly. Under new standard deduction ($32,200), *not itemizing* may yield lower taxable income. Alternatively, **Sam**, a high wage earner, may be subject to AMT—so Jamie may profit from squeezing deductions to avoid crossing the AMT exemption threshold. ## Conclusion The 2026 inflation adjustments under the One, Big, Beautiful Bill meaningfully shift thresholds and deductions for many taxpayers. **Planning ahead in late 2025**—including reviewing deductions, income timing, estate strategy, and filing status—can help minimize liabilities and maximize benefits.