IRS Reveals 2026 Tax Adjustments With Changes From ‘Big, Beautiful Bill’
The Internal Revenue Service announced on Thursday a wide range of annual inflation-related adjustments for dozens of tax provisions, incorporating the updates mandated by the One Big Beautiful Bill Act (OBBBA).
The newly released figures will primarily take effect for the 2026 tax year.
For most taxpayers who take the standard deduction rather than itemizing, the deduction will rise to $16,100 for single filers and $32,200 for married couples filing jointly. The OBBBA had already raised the standard deduction for 2025 to $15,750 for individuals and $31,500 for joint filers.
The agency also updated its marginal tax brackets, increasing the income thresholds to reflect inflation.
The highest tax rate will remain 37% in 2026, applying to single earners making over $640,600 and to married couples filing jointly with incomes above $768,700. The revised brackets and rates for 2026 are as follows:
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35% for incomes over $256,225 for single filers and $512,450 for married filers.
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32% for incomes over $201,775 for single filers and $403,550 for married filers.
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24% for incomes over $105,700 for single filers and $211,400 for married filers.
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22% for incomes over $50,400 for single filers and $100,800 for married filers.
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12% for incomes over $12,400 for single filers and $24,800 for married filers.
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10% for incomes up to $12,400 for single filers and $24,800 for married filers.
Among other OBBBA-related changes, the federal estate tax exclusion will rise to $15 million for individuals who die in 2026, up from $13.99 million in 2025.
The adoption tax credit will increase slightly to $17,670 for 2026, compared to $17,280 in 2025, with up to $5,120 of that credit refundable.
For the alternative minimum tax, the exemption will be $90,100, beginning to phase out at $500,000 for individuals and $1 million for married couples filing jointly.
The OBBBA also significantly raised the employer-provided childcare tax credit, increasing the maximum benefit from $150,000 to $500,000 — or up to $600,000 for qualifying small businesses.
Inflation indexing will also impact several other provisions. The earned income tax credit will now have a maximum benefit of $8,231 for eligible families with three or more children, up from $8,046 in 2025.
Employee contributions to health flexible spending accounts will rise to $3,400 in 2026, an increase of $100. Cafeteria plans that permit unused funds to carry over will now allow up to $680 to be rolled over, up $20 from 2025.
For individuals with self-only medical savings account coverage, the minimum deductible will increase to $2,900 (up $50) and the maximum deductible will rise to $4,400 (up $100). The maximum out-of-pocket cap will be $5,850, a $150 increase.
For families with medical savings accounts, the deductible range will be between $5,850 and $8,750, and the total out-of-pocket limit will reach $10,700 for 2026.
Transportation-related benefits will also see a small boost, with the monthly limit for qualified commuter and parking expenses climbing by $15 to $340.
The annual gift tax exclusion will remain unchanged at $19,000 for 2026.
Several provisions that were once adjusted annually for inflation will remain fixed going forward, including personal exemptions, itemized deduction thresholds, and the income level used to phase out the lifetime learning credit.
{Matzav.com}
