Compliance
Preparing for 2026: Inflation Adjustments You Can’t Ignore Now
The IRS has released critical inflation adjustments under OBBB for tax year 2026—learn how changes to standard deductions, AMT, and more will affect your tax profile.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## Why Inflation Adjustments Matter in 2026
With the One, Big, Beautiful Bill Act incorporated into law, the IRS publishes **Revenue Procedure 2025-32**, which sets inflation changes for over 60 tax provisions going into effect for tax year 2026. These updates impact **your taxable income, estate plans, deductions, and tax credits**. ([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 Inflation Changes to Know Now
Here are the biggest changes that will influence tax planning before year-end:
| Area | 2025 Value | 2026 Value Under OBBB |
|---|---|---|
| Standard Deduction (Married Filing Jointly) | $31,500 | $32,200 ([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)) |
| Standard Deduction (Single) | $15,750 | $16,100 ([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 (Unmarried) | see individual status | $90,100 (phase-out $500,000) ([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)) |
| Estate Tax Exclusion | $13,990,000 | $15,000,000 ([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)) |
| Foreign Earned Income Exclusion | $130,000 | $132,900 ([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)) |
Other items like the Earned Income Tax Credit, employer-provided childcare credit, health FSA limits, and qualified transportation fringe benefits are adjusted upward. ([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))
## Strategic Planning Based on These Adjustments
- **Review withholding and estimated taxes**: If you typically hover near tax bracket edges, these adjustments may push you into lower rate ranges—so less withholding might be needed.
- **Charitable planning & gifting**: Estate planning especially benefits, as the exclusion jumps significantly. Consider timed giving if you’re nearing thresholds.
- **Retirement planning**: Higher deductions and AMT changes may allow more flexibility if you use it strategically.
- **Foreign/expat taxpayers**: The Foreign Earned Income Exclusion increase helps reduce taxable foreign income, allowing more income to go home tax-free.
## Compliance and Timing
- Make sure to **update payroll systems and tax software** before 2026 starts—so withholdings and calculator tools incorporate the new numbers.
- For year-end charitable contributions or gift-giving, plan with 2026 limits in mind—it might make sense to bunch gifts or expenses around the cutoff.
- If you’re a financial professional, educate clients now: potential benefits to pushing under 2025 vs 2026 thresholds depending on income patterns.
- For self-employed individuals using FSAs or MSAs, check that your plan documentation reflects the higher deductible and out-of-pocket caps in 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))
## Example in Practice
Sarah is single, earns $160,000 in wage income with $10,000 in itemized deductions. Under 2025, her standard deduction is $15,750; under 2026, it rises to $16,100. Combined with the higher AMT exemption, her marginal tax exposure on additional income for 2026 will be slightly lower—making deferred income or bonus planning beneficial.
## Summary
- Inflation adjustments under OBBB mean slightly larger standard deductions, higher credit thresholds, and marginally reduced pressure in AMT and estate taxes.
- Proactive updating of payroll, software, and estimated tax plans helps avoid surprises.
- Use these shifts as an opportunity to re-assess planning strategies—especially around income timing, charitable giving, and foreign income.
If you want, I can run numbers for your specific scenario to show the impact across multiple filing statuses.