Inflation-Adjusted Thresholds & Credit Rates (Tax Year 2026)
The IRS announced several inflation adjustments for Tax Year 2026 as part of the One, Big, Beautiful Bill. Key changes include:
- Standard deduction increases to $32,200 for married couples filing jointly; $16,100 for single or married filing separately; $24,150 for heads of households. (irs.gov)
- Foreign Earned Income Exclusion raised to $132,900, up from $130,000. (irs.gov)
- EITC (Earned Income Tax Credit) maximum amount for taxpayers with three or more qualifying children increased to $8,231, up from $8,046. (irs.gov)
These adjustments impact tax planning, especially for those whose income edges into higher tax brackets; retirement savers; and expatriates.
New Depreciation & Production Property Guidance
Under current IRS rules:
- The final regulations under SECURE 2.0 require certain high-income individuals (age 50+)’ catch-up contributions to be made as Roth after-tax contributions for taxable years beginning after 31 December 2026. (irs.gov)
- Interim guidance has been issued for special depreciation allowance for qualified production property under the One, Big, Beautiful Bill. (irs.gov)
Planning opportunities
Retirement & Savings
Plan for Roth catch-ups: if you're a high earner aged 50-63 in a 401(k) or SIMPLE plan, consider anticipating the conversion requirement. Roth contributions grow tax-free but need upfront taxes. Align income timing accordingly. (irs.gov)
Foreign Income for Expats
With Foreign Earned Income Exclusion increasing, expatriates with earnings near former thresholds could shift work income or contracts to benefit, or ensure they're claiming housing and foreign income properly. ●
Business Assets & Manufacturing / Production Property Projects
If you own or plan to acquire ‘qualified production property’ (e.g. manufacturing, production facilities), check the interim guidance for structuring timing and eligibility for special depreciation allowances. (irs.gov)
Practical Example
ManufactureCo sets up a new production facility acquired mid-2026. By ensuring the property qualifies under the interim guidance and placing it into service before year-end, it may claim accelerated depreciation, improving cash flow. Meanwhile, a worker aged 60 should consider Roth catch-ups before rules change at end of 2026.
Action checklist
- Review last year’s tax return to anticipate bracket creep under the new thresholds.
- Plan large purchases or business investments to align with production property eligibility timing.
- Consult a retirement plan administrator to optimize catch-up contribution strategy.
- Use IRS tools or work with advisors to identify foreign income exclusions or credits you now qualify for.
These recent US policy shifts offer meaningful levers for smart taxpayers: those who align timing, structure, and documentation carefully can legally reduce effective tax burdens under evolving law.