IRS Releases 2026 Inflation Adjustments Under the One, Big, Beautiful Bill
The Internal Revenue Service has announced the annual inflation adjustments for more than 60 tax provisions for tax year 2026. These updates reflect changes required under the One, Big, Beautiful Bill (OBBBA) and are detailed in Revenue Procedure 2025-32. The new amounts apply to returns filed in 2027.
2026 Key Adjustments
- Standard Deduction
Married filing jointly – $32,200
Single or married filing separately – $16,100
Head of household – $24,150
Marginal Tax Rate Tables
The following tables show the 2026 income thresholds for each filing status. The top rate of 37 percent begins above $640,600 for single taxpayers and $768,700 for married taxpayers filing jointly.
| Tax Rate | Single | Married Filing Jointly |
|---|---|---|
| 10% | Up to $12,400 | Up to $24,800 |
| 12% | $12,401 – $50,400 | $24,801 – $100,800 |
| 22% | $50,401 – $105,700 | $100,801 – $211,400 |
| 24% | $105,701 – $201,775 | $211,401 – $403,550 |
| 32% | $201,776 – $256,225 | $403,551 – $512,450 |
| 35% | $256,226 – $640,600 | $512,451 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
- Alternative Minimum Tax (AMT)
Exemption – $140,200 (joint) and $90,100 (single). Phase out begins at $1,000,000 and $500,000 respectively. - Earned Income Tax Credit (EITC)
Maximum credit for three or more qualifying children – $8,231. - Qualified Transportation and Parking Benefits
Monthly limit – $340 for both transit passes and qualified parking. - Health Flexible Spending Accounts (FSA)
Employee salary reduction limit – $3,400. Maximum carryover – $680. - Medical Savings Accounts (MSA)
Self only coverage deductible range $2,850 to $4,250 (out of pocket limit $5,650).
Family coverage deductible range $5,700 to $8,550 (out of pocket limit $10,400). - Foreign Earned Income Exclusion
$132,900. - Adoption Credit
Maximum qualified adoption expenses – $17,670. Up to $5,120 may be refundable. - Gift and Estate Tax
Basic exclusion – $15,000,000 per individual.
Annual gift exclusion – $19,000.
Gifts to a non U.S. citizen spouse – $194,000. - Employer Provided Childcare Credit
Enhanced maximum credit – $500,000 (large employers) or $600,000 (eligible small businesses). - Personal Exemptions
Remain $0 for 2026. - Itemized Deduction Limitation
Permanently suspended by OBBBA, with a limitation on the benefit of itemized deductions for taxpayers in the 37 percent bracket. - Education Credits
Lifetime Learning Credit phase out MAGI range – $80,000 to $90,000 (single) and $160,000 to $180,000 (joint).
Planning Implications
- Update 2026 withholding and estimated tax payments to reflect the new brackets and standard deduction.
- Review estate and gift plans in light of the $15 million exclusion and $19,000 annual limit.
- Employers should evaluate eligibility for the expanded childcare credit and higher benefit limits.
For complete tables and technical references, visit the official IRS release IRS IR-2025-103 and the full Revenue Procedure 2025-32 (PDF).
Steven J. Cashiola, CPA
(415) 857-3680
cashiola@stevenjcpa.com