Tax Planning
Maximizing Your 2026 Inflation Adjustments: Key Changes Under the One, Big, Beautiful Bill
The IRS has released inflation-adjusted amounts for 2026 affecting standard deductions, tax brackets, and several credits—this article helps you plan where to adjust withholding, charitable giving, or business deposits.
By NomadicTax Research Team • 5-8 min read • November 24, 2025
## What’s New for 2026?
The IRS published Revenue Procedure 2025-32 on October 9, 2025, detailing inflation adjustments for tax year 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)) These changes affect more than 60 tax provisions, including **standard deductions**, **tax brackets**, **estate tax**, **foreign earned income exclusion**, and various credits like the Earned Income Tax Credit.([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))
Here are some big shifts:
| Provision | 2025 Amount | 2026 Amount | Change |
|---|---|---|---|
| Standard Deduction (Married Filing Jointly) | $31,500 | $32,200 | +$700 |
| Standard Deduction (Single) | $15,750 | $16,100 | +$350 |
| Foreign Earned Income Exclusion | $130,000 | $132,900 | +$2,900 |
| EITC (3+ children) – maximum credit | $8,046 | $8,231 | +$185 |
| Childcare benefit limit (employer provided) | — | Increases to higher limits ($500,000 and $600,000) under OBBB | Big boost for eligible small businesses |
## Why These Matter for Tax Planning
- **Withholding adjustments**: If your income will rise, or your filing status changes, you may need to update your W-4 to avoid under- or over-withholding. Rising thresholds mean you're less likely to jump into a higher bracket due to inflation alone.
- **Charitable giving & gifts**: The gift exclusion remains at $19,000, but gift amounts to non-citizen spouses increase to **$194,000**. If you plan large gifts or estate giving, update your strategy 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))
- **Foreign incomes & employer-provided benefits**: As foreign earned income exclusion increases, and employer childcare credits expand, individuals and employers should re-evaluate benefit structuring and international compensation.
## Practical Examples
**Example 1 – Individual with Side Income**
Sarah, a single taxpayer with freelance income of $130,000 in 2026, can now exclude up to **$132,900** of foreign income, which helps reduce overall taxable income if she qualifies under bona fide residence or physical presence tests.
**Example 2 – Employer Provided Childcare Credit**
Your company is considering offering a childcare credit incentive. For 2026, under the OBBB Act, small businesses may attain a maximum employer provided childcare credit of **$600,000**, easing the financial burden of employee benefits.([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
## Actionable Insights
- Review your paystub and tax bracket to verify whether you're in a new threshold.
- Re-run withholding estimators based on the 2026 standards.
- Plan charitable gifts before year-end to align with 2025 limits.
- Employers: explore childcare benefits and prepare for compliance with expanded credit eligibility.
## What’s Not Changing
Some items remain static: personal exemptions remain eliminated (zero), and certain phaseouts (like those for Lifetime Learning Credits) still don’t adjust for inflation.([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))