What’s Changed in Tax Year 2026
The Internal Revenue Service released inflation adjustments as part of the One, Big, Beautiful Bill.(irs.gov) Major elements include:
- Standard Deduction increased to $32,200 for married filing jointly; $16,100 for single filers, and $24,150 for heads of households.(irs.gov)
- Marginal Tax Rates thresholds have also been raised—for example, 24% rate applies to incomes over $105,700 (single) or $211,400 (married filing jointly).(irs.gov)
- The Foreign Earned Income Exclusion rose to $132,900, up from $130,000.(irs.gov)
- The Estate Tax Basic Exclusion Amount now $15,000,000 for deaths in 2026.(irs.gov)
Impact of Adjustments
These changes matter for:
- Individuals close to previous thresholds: moving into higher brackets or entering eligibility for credits.
- Estate planners: planning strategies may adjust now that exclusion amounts have increased.
- Expatriates: higher foreign earned income exclusion offers more leeway.
Concrete Examples
- A married couple with $200,000 income in 2026 will face a different bracket threshold than in 2025—potentially delaying the jump into 32% or 35% rates.
- Someone earning $140,000 abroad excludes the first $132,900 tax-free income, meaning only $7,100 is potentially taxable under this provision.
- Estates worth less than $15 million can now avoid estate tax using the full basic exclusion.
Planning Strategies
- Adjust salary withholding or estimated tax payments to align with the newly higher standard deduction and bracket shifts.
- For those abroad, coordinate FEIE and housing deductions with the new exclusion to maximize benefit.
- Reassess charitable giving and gifting strategies in light of revised gift tax exclusions and dollar limits.
Compliance Tips
- Review payroll forms and quarterly estimated taxes early—don’t wait until your return to adjust.
- Use the updated IRS tables for deductions, exemptions, and phase-outs early in your bookkeeping to avoid surprises.
- Keep detailed documentation, especially where new deductions or credit changes were applied retroactively or mid-year.