Tax Planning
Strategic Tax Planning with the 2026 Inflation Adjustments Under the One, Big, Beautiful Bill
Taxpayers and businesses face a range of new inflation-adjusted thresholds starting in tax year 2026—this article shows how to integrate these changes into planning to optimize deductions, credits, and income reporting.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## What’s Changed in 2026
The IRS released **Revenue Procedure 2025-32**, that implements inflation adjustments for **60+ provisions**, many amended by the One, Big, Beautiful Bill (OBBB). Adjustments include higher standard deductions, updated phase-out thresholds, raise to estate tax exclusions, and more. ([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))
| Adjustment | 2025 Amount | 2026 New Amount | Who’s Celebrated Most |
|--------------|----------------|--------------------|----------------------|
| Standard Deduction (MFJ) | $31,500 | **$32,200** | Married couples filing jointly |
| Standard Deduction (Single) | $15,750 | **$16,100** | All single filers |
| Foreign Earned Income Exclusion | $130,000 | **$132,900** | Digital nomads, expats |
| Estate Tax Basic Exclusion | ~$13.99 million | **$15.00 million** | Estates, high net worth individuals |
## Planning Moves You Can Make Now
- **Check withholding and estimated tax payments**: With higher standard deductions and threshold changes, taxpayers may need to re-run withholding calculators to avoid surprises. Use the IRS Withholding Estimator. ([irs.gov](https://www.irs.gov/newsroom/topics-in-the-news?utm_source=openai))
- **Leverage employer-provided benefits**: Child care credits for employers are enhanced and maximum credits jump to **$500,000** (or $600,000 for eligible small businesses). Small and mid-sized employers should assess whether offering or expanding childcare benefits now yields more tax advantage under OBBB. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Foreign income strategies**: Nomads and expats should note the foreign earned income exclusion rise. Coupled with standard deduction increases, those working abroad have more room before taxable income kicks in.
## Example Scenario: Jane the Digital Nomad
Jane is single, age 35, working remotely from Southeast Asia. In 2026 she earns $130,000 from clients. She stays under the foreign earned income exclusion (now $132,900) and deducts the standard deduction ($16,100). Her taxable income drops to $113,900. Without paying attention to the new figures, she might have misestimated her tax liability in 2025 when the exclusion was $130,000 and the standard deduction lower.
## What About Business Owners?
- Businesses anticipating profits in early 2026 should assess their payouts and bonuses so employees can benefit from higher standard deductions and brackets.
- Those planning gifts should remember the annual gift exclusion increases (noted in Revenue Procedure 2025-32) for trustee plans or family wealth transfers.
## Key Takeaways
1. **Inflation adjustments take effect January 1, 2026**, meaning you can’t retroactively apply them in 2025. ([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))
2. Many phase-outs (AMT, EITC, itemized deductions) simply move upward, easing tax burdens.
3. Combine tactical timing (income shifting, benefit contributions) with above thresholds to maximize net after-tax results.
By aligning your tax planning around these new inflation adjustments, you maximize benefits and avoid unpleasant surprises when filing in 2027.