Understanding the Recent Inflation Adjustments Under OBBB
In October 2025, the IRS released Revenue Procedure 2025-32, which outlines inflation adjustments for more than 60 tax provisions—boosted by permanent changes brought about by the One, Big, Beautiful Bill (OBBB Act). These changes affect standard deductions, tax rate thresholds, estate exclusions, and tax credits starting in tax year 2026. Think of these like annual recalibrations to offset rising costs so your tax benefits don’t shrink with inflation. (irs.gov)
Major Changes You Should Know
- Standard Deductions rise significantly: for married couples filing jointly, it moves up to $32,200 in 2026; for single filers, it becomes $16,100; heads of households now get $24,150. (irs.gov)
- Marginal tax brackets shift upward slightly—keeping more income in lower tax rates for millions. (irs.gov)
- Child Tax Credit maxes out at $2,200 in 2025 and will continue to be inflation-adjusted thereafter. (irs.gov)
- Estate tax exclusion jumps from $13.99 million for 2025 to $15 million for deaths in 2026. (irs.gov)
- Other limits—like those for Adoption Credits, Health FSA plans, and Employer-Provided Childcare Credits—also go up. (irs.gov)
How These Adjustments Affect Different Taxpayers
Let’s break it down with examples:
| Situation | What You Previously Paid | What You’ll Pay Now | What the Change Means |
|---|---|---|---|
| Married couple earning $90,000 across joint return | Some income fell into 22-24% bracket | With higher bracket thresholds, more income may stay in 22% instead of getting pushed up | Could save hundreds in marginal rate exposure |
| Head of household with three dependents | Previous standard deduction of ~$23,000 (2025) | New standard deduction of $24,150 | More income shielded before tax |
| Individual making $130,000, planning a large charitable gift | Less room to itemize | Higher deduction thresholds may preserve itemizing status |
Actionable Strategies for Your 2025/2026 Tax Planning
- Recompute your estimated tax payments if you're self-employed or have variable income. The base rates shifted subtly, which could affect underpayment penalties.
- Bunch deductions (like charitable gifts or medical expenses) into one year if you expect to itemize—higher thresholds may help you benefit more.
- For those helping with children or adopting, review timing of Adoption Credits and Child Tax Credits; changes in amounts and refundable limits could affect how and when you claim them.
- If you’re considering a large gift or estate planning, work now to structure it with the new $15M estate exclusion coming in 2026.
Bottom Line
These inflation adjustments are more than just numbers—they represent real shifts in how much take-home income you get to keep, and how much tax liability you face. By revisiting your withholding, deductions, and timing of big tax events, you can harness the benefits of the OBBB Act’s adjustments. Use this period before the 2026 filings to consult with a CPA or tax advisor to update your tax plan accordingly.