Tax Planning
Planning Ahead: 2026 Inflation Adjustments You Need to Know
Learn how recent inflation adjustments under the One, Big, Beautiful Bill will affect your tax brackets, standard deductions, and credits for 2026 — and how to plan now.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
As the One, Big, Beautiful Bill (OBBB) reshapes U.S. tax policy, the **Internal Revenue Service** has released sweeping inflation adjustments for tax year 2026. Understanding how these numbers shift is essential for accurate tax planning, maximizing deductions, and avoiding surprises. Here’s what you need to know, with strategies you can use starting now.
## What Has Changed for 2026
The IRS Revenue Procedure 2025-32 is at the core of these updates. It sets new thresholds and limits across over 60 tax code provisions. Some of the most notable changes include:
| Item | TY 2025 | TY 2026 | Implication |
|---|---|---|---|
| Standard Deduction (Single) | **$15,750** | **$16,100** | Slight increase helps reduce taxable income sums for many; still important to agent whether itemizing outweighs standard deduction. ([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))
| Married Filing Jointly | $31,500 → **$32,200** | — | Increase helps couples plan withholding and estimated taxes. ([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))
| Child Tax Credit max | $2,200 for 2025; adjusted for inflation in 2026 | **$2,200** in 2025; increases in 2026 | Helps families with children estimate next year's benefit. ([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 | $130,000 | **$132,900** | Key for digital nomads and expats to avoid excess U.S. tax on global income. ([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))
| 401(k) Contribution | $23,500 | **$24,500** | Larger retirement savings potential. ([irs.gov](https://www.irs.gov/newsroom/inflation-adjusted-tax-items-by-tax-year?utm_source=openai))
## Strategies for Effective Tax Planning
Here are specific steps you can take, especially given these changes:
- Adjust your withholding early: If you expect your income to push you into a higher bracket in 2026, consider changing W-4 or estimated payments now to minimize underwithholding penalties.
- Maximize retirement contributions: The higher 401(k) limit gives you more space to save tax-deferred. If you're self-employed, consider SEP-IRAs or Solo 401(k)s.
- Expat & nomad planning: With foreign earned income exclusion rising, monitor your time abroad and foreign housing costs to ensure you're capturing the exclusion correctly.
- Itemize vs standard deduction: With standard deductions rising, perform “what-if” scenarios to see whether you still benefit from itemizing (mortgage interest, SALT, etc.).
- Review eligibility for nonrefundable vs refundable credits: Inflation adjustments may shift phase-out thresholds, meaning you or others may newly qualify—or lose eligibility—for certain credits like the adoption or earned income credit.
## Examples
- **Married couple with $60,000 in deductions**: In 2025, their standard deduction is $31,500; in 2026, it's $32,200. So, if their itemized deductions hover near that level, that extra $700 may tilt the decision toward standard deduction rather than itemizing.
- **Digital nomad earning $130,000 while abroad**: With the foreign earned income exclusion rising to $132,900 in 2026, they may exclude all of that income from U.S. taxes—if they meet the bona fide residence or physical presence test.
**Takeaway**: While many of these inflation adjustments are incremental, together they can meaningfully impact your tax liability. Review your budget, withholding, retirement contributions, and eligibility for deductions now to make the most of 2026.