Tax Planning
Tax Planning Strategies Under the One, Big, Beautiful Bill (OBBB): Inflation Adjustments & Opportunities
Understanding the inflation-adjusted tax provisions under the OBBB can unlock savings for individuals and businesses for 2026. These insights help you adapt your planning now.
By NomadicTax Research Team • 5-8 min read • November 19, 2025
## What is the One, Big, Beautiful Bill (OBBB)?
Signed into law on July 4, 2025, the **OBBB** enacted sweeping changes to U.S. tax code, many with *permanent effect*, including rate tables, standard deductions, and key credits. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
## Inflation Adjustments for Tax Year 2026
Revenue Procedure 2025-32 adjusts more than 60 tax provisions—including tax rate schedules, standard deductions, and major credits—for inflation. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai)) Highlights:
- Standard deduction for **single** filers (and married filing separately): **$15,750** ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- Heads of households: **$23,625** ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- Married filing jointly / surviving spouses: **$31,500** ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- The **child tax credit** maximum remains at **$2,200** for tax year 2025, but this is adjusted for inflation beginning in 2026. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
## Key Planning Takeaways
| Action | Why It Matters | Suggested Timing |
|---|---|---|
| Review withholding & payroll tax notices | Employers will need to adopt revised withholding tables in 2026 to reflect inflation adjustments under OBBB. | Late 2025 / early 2026 ([irs.gov](https://www.irs.gov/newsroom/irs-announces-no-changes-to-individual-information-returns-or-withholding-tables-for-2025-under-the-one-big-beautiful-bill-act?utm_source=openai)) |
| Accelerate deductions or income timing | When inflation adjustments push you into a different bracket, timing **bonuses**, **business expenses**, or **asset acquisitions** before year-end may reduce tax liabilities. | Before December 31, 2025 |
| Evaluate eligibility for refundable portions of credits | OBBB added a **refundable portion** (up to $5,000, inflation-indexed after 2025) for certain credits under §23(a)(4). Individuals who don't have enough tax liability to use full credits may benefit. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai)) | Use during 2026 tax planning |
## Example Scenarios
- **Couple, married filing jointly**, with $600,000 taxable income: Standard deduction is now $31,500 for 2026. They should verify that deductions and credits are being claimed efficiently. Reducing taxable income just below certain bracket edges saves thousands.
- **Single filer** earning $65,000: With new standard deduction and brackets, they may stay in 12% bracket longer. A choice to defer income into 2026 or bunch deductions into 2025 could shift their rate exposure.
## Pitfalls & Common Missteps
- Forgetting: Inflation adjustments don't apply to all tax thresholds—some definitions and phaseouts are fixed until changed explicitly. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- Overlooking: The **limitation on employee retention credits** filed late for Quarters 3 & 4 2021 has tighter rules. Don’t assume prior practices still apply. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Actionable Checklist
1. Update payroll systems with 2026 rate schedules now.
2. Withhold or accrue expenses/income with bracket thresholds in mind.
3. Review credits such as Child Tax Credit—ensure your tax liability and filing status maximize benefit.
4. Consult a tax professional if unusual income (stock sales, overseas income, etc.) could push into complex reporting.
**Bottom line:** With OBBB in place, inflation-indexed thresholds offer breathing room—but only if you plan proactively. Use late-2025 to position income, deductions, and credits to your best advantage.