Tax Planning
Tax Planning Through U.S. Inflation Adjustments Under OBBB: What to Know in 2026
Inflation adjustments under the One, Big, Beautiful Bill have raised thresholds and deductions. A golden opportunity for individuals to re-optimize married-filing status, estate planning, and more.
By NomadicTax Research Team • 5-8 min read • May 13, 2026
## Inflationary Changes You Can Leverage in 2026
The One, Big, Beautiful Bill (Public Law 119-21) introduced increased thresholds and amounts for many tax items for **tax year 2026** (filing in 2027). These changes include:
- **Standard deduction**: \$32,200 (married filing jointly), \$16,100 (single/MFS), \$24,150 (head of household). Significantly higher than prior year, increasing taxable income exclusion. ([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))
- **Foreign earned income exclusion** rose to **\$132,900**, meaning more of your overseas-earned pay can be excluded if you qualify. ([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))
- **Estate tax exclusion** jumped to **\$15,000,000** from approx \$13.99 million previously. ([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))
- **Earned Income Tax Credit (EITC)** maximums increased as well; 2026’s top amount for taxpayers with three+ children is \$8,231. ([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))
## Planning Opportunities
### Timing Income and Deductions
- **Married filing jointly vs separately**: If one spouse’s income is approaching the next bracket under inflation adjustments, filing separately may allow other deductions or credits to be more effective—but note joint filing often gives more privilege on standard deduction.
- **Itemized deductions vs taking standard deduction**: With an elevated standard deduction, fewer taxpayers will itemize. Deductions like mortgage interest or charitable giving may need to be larger to justify itemizing.
### Estate and Gift Planning
- The higher estate tax exclusion allows for larger estate transfers without tax—but you should still engage estate planning to lock in favorable valuations and avoid unexpected state-level estate taxes.
- Gift-splitting or setting up trusts remains powerful tools, but with the exclusion increased, lower urgency—yet documentation stays critical.
### Foreign Earned Income and Nomads
- If you qualify for the foreign earned income exclusion, the higher ceiling means nomads with higher pay can exclude more—from U.S. tax return.
- Also consider state taxes: some states don’t recognize FEIE or similar exclusions.
## Actionable Advice
- Update your W-4 or withholding elections now, especially if you’re seeing high withholding due to old thresholds. Higher thresholds could mean you overpaid. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers?utm_source=openai))
- Review retirement contributions and charitable giving to ensure deductions are efficient under standard deduction thresholds.
- If you expect to inherit large asset base, consult an estate planner to see if using the new exclusion is best route.
- Consider converting traditional retirement accounts to Roth when income is lower—because higher standard deduction & lower marginal tax rate early in year could mean lower tax on conversion.
**Bottom line**: Inflationary changes under OBBB redesign many tipping points in U.S. tax planning. Whether you’re juggling international income, estate concerns, or charitable strategies—2026 gives you room to structure smarter.