Major Federal Tax Changes in 2026 under the One Big Beautiful Bill Act (OBBBA)
2026 will bring several significant shifts in federal tax law that affect nearly every taxpayer. I help clients evaluate their individual and business situations before these provisions take effect. Contact Me to develop a 2025 year-end plan that captures deductions while the current rules remain favorable.
Overview
The Internal Revenue Service issued IR-2025-103 announcing official 2026 inflation adjustments, including amendments enacted under the One Big Beautiful Bill Act (OBBBA). These updates affect the 2026 standard deduction, tax rate schedules, and several itemized and above-the-line deductions. The adjustments apply to returns filed in 2027.
2026 Standard Deduction Amounts
For tax year 2026, the standard deduction increases to:
- $32,200 – Married Filing Jointly
- $16,100 – Single or Married Filing Separately
- $24,150 – Head of Household
The personal exemption remains eliminated, as made permanent under OBBBA. (IRS IR-2025-103)
2026 Individual Income Tax Rates
The following tax rate schedule applies for tax year 2026, as detailed in Revenue Procedure 2025-32:
| Rate | Single Filers | Married Filing Jointly |
|---|---|---|
| 10% | Up to $12,400 | Up to $24,800 |
| 12% | Over $12,400 to $50,400 | Over $24,800 to $100,800 |
| 22% | Over $50,400 to $105,700 | Over $100,800 to $211,400 |
| 24% | Over $105,700 to $201,775 | Over $211,400 to $403,550 |
| 32% | Over $201,775 to $256,225 | Over $403,550 to $512,450 |
| 35% | Over $256,225 to $640,600 | Over $512,450 to $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Charitable Contribution Deduction Changes
The One Big Beautiful Bill Act made two significant changes beginning in 2026 that affect both itemizers and non-itemizers. These adjustments are intended to broaden participation in charitable giving while preventing excessive deductions at very low income levels.
For Non-Itemizers
Starting in 2026, taxpayers who claim the standard deduction may also deduct charitable contributions up to:
- $1,000 – Single or Head of Household
- $2,000 – Married Filing Jointly
This above-the-line deduction applies to cash contributions made to qualified 501(c)(3) public charities and is claimed directly on Form 1040. Contributions to donor-advised funds, supporting organizations, and private foundations generally do not qualify. (IRS Topic 506)
For Itemizers
While the 60 percent of AGI ceiling for cash contributions to public charities remains intact under OBBBA, a new 0.5 percent of AGI floor applies starting in 2026. Only charitable amounts exceeding this floor are deductible. The goal is to simplify reporting of small, routine donations and ensure documentation for larger gifts.
Key limits under current law remain:
- 60 percent of AGI – Cash contributions to public charities.
- 30 percent of AGI – Appreciated property contributions to public charities.
- 20 to 30 percent of AGI – Contributions to private foundations, depending on type.
- Five-year carryforward – Unused deductions may be carried forward up to five years.
See IRS Publication 526 for examples and valuation guidance.
Charitable Planning for 2025
- Bunch charitable giving into 2025 to exceed the standard deduction threshold before the 0.5 percent floor begins.
- Use a donor-advised fund (DAF) to claim a 2025 deduction while spreading future charitable grants.
- Donate appreciated securities to avoid capital gains tax and deduct fair market value.
- Maintain written acknowledgments for any contribution of $250 or more as required by Topic 506.
Additional 2026 IRS Thresholds
- Estate and Gift Tax Exemption: $15,000,000 per individual.
- Annual Gift Exclusion: $19,000 per recipient.
- Foreign Earned Income Exclusion: $132,900.
- Alternative Minimum Tax (AMT) Exemption: $90,100 (single) and $140,200 (joint).
All figures are from Revenue Procedure 2025-32.
Summary
The 2026 tax year will reflect the first full cycle of OBBBA’s permanent reforms. While most rate brackets and standard deduction increases provide continuity, charitable deductions have been reshaped with a modest floor and a new benefit for non-itemizers. Taxpayers should review their charitable plans and timing strategies before year-end 2025 to secure the best overall tax position.
Further Reading
- IRS – IR-2025-103 (Oct 9 2025)
- IRS – Revenue Procedure 2025-32
- IRS – Topic No. 506 Charitable Contribution Deductions
- IRS – Publication 526 Charitable Contributions
Contact Me
If you would like to discuss how the 2026 changes under OBBBA may affect your tax planning or to schedule a personalized year-end review, Contact Me.
