The IRS has issued its 2026 inflation adjustments, which usher in changes to more than 60 tax provisions affecting a broad range of taxpayers. Among the most significant updates are higher standard deduction amounts, revised tax bracket thresholds, and other key inflation-indexed figures. Revenue Procedure 2025-32 also incorporates several provisions stemming from the One Big Beautiful Bill Act (OBBBA), reflecting both routine annual adjustments and notable policy shifts that will shape tax planning for the year ahead.
Key Adjustments Under OBBB
These 2026 figures generally apply to tax returns filed in 2027. Among the most relevant updates are the following:
Standard Deduction
- Married couples filing jointly: $32,200
- Single filers and married filing separately: $16,100
- Heads of household: $24,150
Marginal Tax Rates
The top individual tax rate remains 37% for single filers with incomes over $640,600 and joint filers with incomes over $768,700. Other brackets for 2026 include:
- 35% for income over $256,225 ($512,450 for married joint filers)
- 32% for income over $201,775 ($403,550 for married joint filers)
- 24% for income over $105,700 ($211,400 for married joint filers)
- 22% for income over $50,400 ($100,800 for married joint filers)
- 12% for income over $12,400 ($24,800 for married joint filers)
- 10% for income at or below $12,400 ($24,800 for married joint filers)
Alternative Minimum Tax (AMT)
- Unmarried individuals: $90,100 exemption, phasing out at $500,000
- Married filing jointly: $140,200 exemption, phasing out at $1,000,000
Estate and Gift Tax
- Estate tax exclusion for decedents who died in 2026: $15,000,000 (up from $13,990,000 in 2025)
- Annual gift exclusion: $19,000 (unchanged)
- Gifts to non-citizen spouses: $194,000 (up $4,000 from 2025)
Adoption Credit
- Maximum credit: $17,670 (up from $17,280 in 2025)
- Refundable portion: $5,120
Employer-Provided Childcare Credit
- Maximum credit rises to $500,000 ($600,000 for eligible small businesses), up from $150,000.
Other Inflation-Indexed Items
- Earned Income Tax Credit (EITC): Maximum credit for three or more qualifying children is $8,231 (up from $8,046 in 2025).
- Qualified transportation fringe benefit and parking: $340 per month (up $15).
- Health Flexible Savings Account (FSA) contribution limit: $3,400 (up $100); maximum carryover: $680 (up $20).
- Medical Savings Accounts:
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- Self-only deductible: $2,900–$4,400 (up from $2,850–$4,300)
- Self-only out-of-pocket maximum: $5,850 (up $150)
- Family deductible: $5,850–$8,750 (up from $5,700–$8,550)
- Family out-of-pocket maximum: $10,700 (up $200)
- Foreign earned income exclusion: $132,900 (up from $130,000).
Items Not Subject to Inflation Indexing
Some provisions remain unchanged:
- Personal Exemption: $0, unchanged from 2025. (This exclusion was made permanent by OBBB; it does not include the OBBB senior deduction.)
- Itemized Deduction Limitation: Permanently eliminated for most taxpayers; however, a cap applies to those in the 37% bracket.
- Lifetime Learning Credit Phaseout: No inflation adjustments since 2020. MAGI thresholds remain $80,000–$90,000 for single filers and $160,000–$180,000 for joint filers.
Full details are available in Revenue Procedure 2025-32, which outlines all inflation-adjusted figures for the 2026 tax year. Contact your Stephano Slack tax manager or partner at 610-687-1600 or TaxInfo@StephanoSlack.com to discuss your situation.
Author Jackie Himes, CPA, partner, is a trusted authority in serving high-net-worth individuals and closely held businesses. She provides strategic financial guidance that fuels growth and sustainability. She can be contacted at 610-710-4057 or Jhimes@stephanoslack.com.
Disclaimer: This content is for informational purposes only and doesn’t constitute professional advice.
Source: Revenue Procedure 2025-32. Internal Revenue Service. October 9, 2025
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