Tax Planning
Maximizing Your 2026 Standard Deduction and Related Inflation Adjustments Under the One, Big, Beautiful Bill
The IRS has released inflation adjustments for the 2026 tax year under the One, Big, Beautiful Bill—including increased standard deductions, AMT exemptions, and more. Here's how to use them to plan ahead.
By NomadicTax Research Team • 5-8 min read • November 19, 2025
## What changed for 2026 under the One, Big, Beautiful Bill (OBBB)
The IRS announced a range of **inflation adjustments** for the 2026 tax year affecting standard deductions, tax brackets, credits, and more under the OBBB. These changes apply to returns filed in **2027**. ([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))
### Key adjustments
- Standard deduction rises to **$32,200** for married filing jointly; **$16,100** for single or married filing separately; **$24,150** for heads of households. ([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 maximum for 3+ children rises to **$8,231** (up from $8,046). ([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 Earned Income Exclusion increased to **$132,900** (from $130,000). ([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))
- AMT exemption and phase-out thresholds also adjusted significantly. ([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 Planning Opportunities
### 1. Adjust Withholding and Estimated Payments
With higher standard deductions, your taxable income may drop—this might make you eligible for lower withholding or smaller quarterly estimates. Review your withholding now so you're not overpaying or facing penalties.
### 2. Reevaluate Filing Status
Some taxpayers may benefit more under “married filing jointly” vs “separate” due to how standard deductions and tax brackets widen. Use tax software or consult a professional to model both options with the new thresholds.
### 3. Use Credits Strategically
Credits like the Earned Income Tax Credit and Child Tax Credit are tied to income ranges; with inflation, you're more likely to qualify. If you're close to phase-outs, small changes in income or timing of income could matter.
### 4. Retirement Contributions & Education Planning
An increased Foreign Earned Income Exclusion might affect expatriates’ decision to contribute to U.S. retirement accounts or pay U.S. taxes on foreign income. Likewise, tuition payments or scholarships might become more impactful under revised brackets.
## Example Scenario
Sarah and Miguel, married filing jointly, normally take the standard deduction. In 2025 it will be $31,500. In 2026 that rises to **$32,200**. Because Sarah expects her 2026 taxable income to increase slightly, the extra cushion may keep them in a lower bracket. Meanwhile, their eligible earned income credit goes up—making tax credits available that may cover part of estimated tax payments.
## Actionable Tips Before Year-End
- If possible, accelerate income or deductions to take advantage of the current 2025 thresholds vs waiting for 2026, depending on your income profile.
- Confirm that any pay increases, bonuses, or stock vesting won’t push you into higher phase-out zones under the adjusted brackets.
- Keep updated with IRS guidance for 2025 vs 2026 because some OBBB provisions like tips/overtime deductions require new reporting in 2026 and transition relief applies for tax year 2025. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-tax-year-2025-for-information-reporting-on-tips-and-overtime-under-the-one-big-beautiful-bill?utm_source=openai))
By understanding these adjustments now, you can make smarter decisions before year-end—maximizing deductions and credits while minimizing surprises when filing your 2026 return.