Tax Planning

Tax Planning Confidence: Leveraging Inflation Adjustments & Credits in OBBB for 2026

With inflation adjustments kicking in for 2026 under OBBB—higher standard deductions, enhanced credits, and changed limits—this article arms you with strategies to plan ahead and maximize tax savings.

By NomadicTax Research Team • 5-8 min read • November 21, 2025

## What’s New for 2026 Under OBBB A recent IRS announcement, **Revenue Procedure 2025-32**, released on **October 9, 2025**, provides inflation-adjusted figures for over 60 Code provisions for the 2026 tax year. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai)) Key adjustments include: - Increased **standard deduction** for married couples to **$32,200**, for single filers **$16,100**, and heads of households **$24,150**. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions?utm_source=openai)) - Adoption credit rises to **$17,670**, with a portion refundable as OBBB enhanced this for adoptions starting 2026. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai)) - Fringe benefit exclusions and payroll limits adjusted, e.g., the dependent care assistance limit increased under IRC 129 from $5,000 to **$7,500** for 2026 (though not indexed further) under OBBB. ([taxnews.ey.com](https://taxnews.ey.com/news/2025-2076-2026-inflation-adjustments-for-fringe-benefits-and-other-payroll-related-provisions-updated-by-irs-guidance-and-obbba?utm_source=openai)) These changes offer valuable planning windows for individuals, families, and small business owners. Here’s how to use them. ## Planning Tips & Strategies ### 1. Bunch Deductions in 2025 vs 2026 With standard deductions rising, fewer taxpayers will benefit from itemizing in 2026. If incurring large deductible expenses (medical, charitable), consider **accelerating** them into 2025 when itemizing might still provide greater benefit. ### 2. Adoption and Dependent Credits Timing If you expect adoption expenses, trust OBBB’s refundable component becomes available after 2024. Planning expenses or finalizing adoptions in early 2026 can align with higher credit amounts. Keep proofs, receipts, and legal documents carefully preserved. ([taxnews.ey.com](https://taxnews.ey.com/news/2025-2076-2026-inflation-adjustments-for-fringe-benefits-and-other-payroll-related-provisions-updated-by-irs-guidance-and-obbba?utm_source=openai)) ### 3. Leveraging Employer-Provided Benefits The enhanced exclusion for dependent care assistance ($7,500) effective Jan 1, 2026, allows more tax-free benefits. If your employer sponsors such plans, try to maximize contributions—especially if your child care costs qualify. ([taxnews.ey.com](https://taxnews.ey.com/news/2025-2076-2026-inflation-adjustments-for-fringe-benefits-and-other-payroll-related-provisions-updated-by-irs-guidance-and-obbba?utm_source=openai)) ### 4. Adjust Withholding (for 2026) Though withholding tables didn’t change for 2025, many benefits, deductions, and credits are effective retroactively to Jan 1, 2025. For 2026, explore adjusting withholding to avoid large overpayments or underpayments mid-year. ### 5. Monitoring AGI Thresholds Many deductions under OBBB—for tips, overtime, car loan interest—phase out at AGIs like $150,000 (single) / $300,000 (joint). Small income mis-estimates can eliminate benefit. Use IRS estimator tools or tax software to project your 2026 AGI and determine eligibility early. ## Example Scenarios - **Small Business Owner**: Jane expects high business expenses in late 2025; she bunches charitable gifts into 2025, itemizes this year, and takes standard deduction in 2026 when it’s higher. | - **Dual Income Couple**: John and Mia expect overtime in 2025, push some wages into that year to maximize overtime deduction and standard deductions, then reduce side gig income in 2026 to stay under AGI thresholds. | - **Families expecting a child or adoption**: Plan the adoption timing and incur qualified expenses in 2026 to benefit from higher credit and reduced cost basis. ## Risks & Considerations - **Future Expirations**: Many OBBB benefits expire after **2028**. Long-term planning must consider sunset clauses. | - **Complex Source Income**: If you have foreign income, investment income, or SSTB status under Section 199A, check which benefits apply. | - **State and Local Tax (SALT)** caps have shifted. While SALT deduction limits increased to $40,000 under OBBB, they still phase out at certain AGI levels and apply differently by filing status. | - **Documentation & Reporting**: New reporting rules start for tips, car interest, remittance tax; noncompliance even with reasonable cause may incur penalties after transition periods. | ## Summary OBBB plus IRS’s inflation adjustments for 2026 unlock opportunities for higher deductions, increased credits, and elevated standard deductions. With strategic timing, careful income management, and attention to phase-outs, you can maximize tax savings over the 2025-2026 seasons. Stay compliant, track changes, and plan with foresight.