Understanding the Inflation Adjustments for 2026
The IRS has released inflation adjustments for over 60 tax provisions, thanks in part to Revenue Procedure 2025-32, which includes changes under the One, Big, Beautiful Bill (OBBB).(irs.gov) Key adjustments include:
| Provision | 2025 | 2026 |
|---|---|---|
| Standard Deduction (Married Filing Jointly) | $31,500 | $32,200 (irs.gov) |
| Standard Deduction (Single) | $15,750 | $16,100 (irs.gov) |
| Alternative Minimum Tax Exemption (Single) | – | $90,100 phase-out starting at $500,000 (irs.gov) |
| Foreign Earned Income Exclusion | $130,000 | $132,900 (irs.gov) |
Key Threshold Changes You Need To Know
- The maximum Earned Income Tax Credit (EITC) for those with three+ qualifying children rises to $8,231, up from $8,046 in 2025.(irs.gov)
- Gift exclusion to noncitizen spouses increases to $194,000 in 2026.(irs.gov)
- AMT exemption amounts have also increased—important if your income is high.(irs.gov)
Planning Tactics For Individuals & Families
- Time deductions & itemization: If you usually take itemized deductions, evaluate whether bunching medical or charitable deductions into 2025 could exceed the higher standard deduction in 2026.
- Maximize retirement contributions: Knowing contribution limits may also adjust upward aligns with tax-planning for 2026. Use 2025 contributions where beneficial.
- Review dependent and family planning: Gift exclusion and adoption credit changes could affect timing related to large gifts or adopting.
Reporting Thresholds & Information Returns: What Shifts Under OBBB
- The Form 1099-K threshold for third-party settlement organizations (TPSOs) is now reset to $20,000 and more than 200 transactions for businesses and individuals under OBBB. This reverts the threshold that ARPA briefly lowered.(irs.gov)
Example Scenario
Jane, a married couple filing jointly, donates heavily in charitable gifts in autumn 2025. Under the 2025 standard deduction ($31,500), even sizable itemized deductions say $25,000 aren’t enough. But with 2026’s higher standard deduction ($32,200), they may choose to defer some expenses into 2026 to cross the threshold. Meanwhile, suppose Jane sells handmade crafts via an online platform. Under new 1099-K rules, she’ll be subject to reporting only if her payments exceed $20,000 and 200 transactions—not simply exceeding $600. That affects whether she must withhold or collect extra records.
Action Steps Before 2026 Arrives
- Estimate your taxable income & deductions now to see whether to accelerate or delay certain expenses.
- Track transactions with payment platforms; know when you might hit the Form 1099-K trigger.
- Consult a tax professional if you are near major thresholds: AMT exposure, foreign earned income, or large gifting.
Bottom line: The OBBB boosts many of the inflation-indexed thresholds, and understanding these adjustments now gives you room to shift your tax posture—accelerating deductions, managing recognition, and planning for reporting thresholds.