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Published: January 11, 2026
The IRS has released the inflation-adjusted tax figures for 2026, which will apply to tax returns filed in 2027 under current law. That makes this a good time to review the key 2026 tax changes, along with a few items that did not change. Updates to deductions, tax brackets, and income thresholds can affect your tax planning, and the One Big Beautiful Bill Act (OBBBA) also adds several newer deductions that could matter for many households.
At Raining Pennies, one of my goals is to distill financial information from sources that can often be complex, ambiguous, or lengthy. This blog is an example of that effort. I discovered the IRS adjustments for 2026 through official IRS releases, plus a few helpful summaries that put the changes in plain English. By tackling the hard work of sifting through these updates, I strive to save you time and help you navigate your finances with clarity and confidence.
Below, we’ll break down the notable changes for 2026 with side-by-side comparisons to 2025.
Common Provisions to Point Out
While some tax provisions may seem obscure, others are relevant to a large number of taxpayers. Below are a few common provisions and adjustments that can impact your planning:
- Standard Deductions: Adjusted each year for inflation, the standard deduction reduces the amount of income subject to tax, offering immediate tax relief.
- Marginal Tax Rates: These rates determine the percentage of tax owed on your taxable income within specific brackets. Your income is taxed in layers, not all at one rate.
- Annual Gift Tax Exclusion: You can give up to the exclusion amount to anyone in a tax year without needing to file a gift tax return or reducing your lifetime gift and estate tax exemption. The annual exclusion remains $19,000 for both 2025 and 2026. For more information, see Gift Tax Rules: The Unknown Facts You Must Know.
Notable Changes for Tax Year 2026
For 2026, the IRS has made inflation adjustments across key tax provisions. These updates affect standard deductions, marginal tax rate bracket thresholds, credits, and several other tax-related limits.
The table below provides a side-by-side comparison of changes from 2025 to 2026. (For standard deductions, the IRS explicitly notes the 2025 amounts under the OBBBA law, so the 2025 column reflects that updated baseline.)
| Tax Provision | 2026 Value | 2025 Value | Difference |
|---|---|---|---|
| Standard Deductions | |||
| Single Filers and Married Individuals Filing Separately | $16,100 | $15,750 | +$350 |
| Married Filing Jointly | $32,200 | $31,500 | +$700 |
| Head of Household | $24,150 | $23,625 | +$525 |
| Marginal Tax Rates | |||
| 10% Rate | |||
| Single Filers and Married Individuals Filing Separately | $12,400 or less | $11,925 or less | +$475 |
| Married Filing Jointly | $24,800 or less | $23,850 or less | +$950 |
| 12% Rate | |||
| Single Filers and Married Individuals Filing Separately | Over $12,400 | Over $11,925 | +$475 |
| Married Filing Jointly | Over $24,800 | Over $23,850 | +$950 |
| 22% Rate | |||
| Single Filers and Married Individuals Filing Separately | Over $50,400 | Over $48,475 | +$1,925 |
| Married Filing Jointly | Over $100,800 | Over $96,950 | +$3,850 |
| 24% Rate | |||
| Single Filers and Married Individuals Filing Separately | Over $105,700 | Over $103,350 | +$2,350 |
| Married Filing Jointly | Over $211,400 | Over $206,700 | +$4,700 |
| 32% Rate | |||
| Single Filers and Married Individuals Filing Separately | Over $201,775 | Over $197,300 | +$4,475 |
| Married Filing Jointly | Over $403,550 | Over $394,600 | +$8,950 |
| 35% Rate | |||
| Single Filers and Married Individuals Filing Separately | Over $256,225 | Over $250,525 | +$5,700 |
| Married Filing Jointly | Over $512,450 | Over $501,050 | +$11,400 |
| 37% Rate (Top Tax Rate) | |||
| Single Filers and Married Individuals Filing Separately | Over $640,600 | Over $626,350 | +$14,250 |
| Married Filing Jointly | Over $768,700 | Over $751,600 | +$17,100 |
| Alternative Minimum Tax (AMT) Exemption | |||
| Single Filers | $90,100 | $88,100 | +$2,000 |
| Married Individuals Filing Separately | $70,100 | $68,500 | +$1,600 |
| Married Filing Jointly | $140,200 | $137,000 | +$3,200 |
| Medical Savings Accounts (MSA) | |||
| Self-Only Coverage | |||
| Minimum Deductible | $2,900 | $2,850 | +$50 |
| Maximum Out-of-Pocket | $5,850 | $5,700 | +$150 |
| Family Coverage | |||
| Minimum Deductible | $5,850 | $5,700 | +$150 |
| Maximum Out-of-Pocket | $10,700 | $10,500 | +$200 |
| Other Benefits, Deductions, Exclusions, and Credits | |||
| Earned Income Tax Credit (EITC) Maximum (For 3 or More Qualifying Children) | $8,231 | $8,046 | +$185 |
| Qualified Transportation Fringe Benefit (Transit and Parking) | $340/month | $325/month | +$15/month |
| Health Flexible Spending Plans (Employee Salary Reduction Limit) | $3,400 | $3,300 | +$100 |
| Health FSA Carryover (If Your Plan Allows Carryover) | $680 | $660 | +$20 |
| Foreign Earned Income Exclusion | $132,900 | $130,000 | +$2,900 |
| Estate Tax Basic Exclusion Amount | $15,000,000 | $13,990,000 | +$1,010,000 |
| Annual Gift Tax Exclusion | $19,000 | $19,000 | $0 |
| Annual Gift Tax Exclusion (Spouse Not a U.S. Citizen) | $194,000 | $190,000 | +$4,000 |
| Adoption Credit (Maximum Qualified Expenses) | $17,670 | $17,280 | +$390 |
| Note: For 2026, up to $5,120 of the adoption credit may be refundable (subject to eligibility rules). | |||
New OBBBA Deductions to Know About for 2026
The table above focuses on the IRS inflation adjustments. However, the OBBBA law also created several newer deductions that remain active for 2026. Some of these are “above-the-line” deductions, which means you may be able to claim them whether you itemize or take the standard deduction (assuming you meet the eligibility rules). Others, such as the expanded SALT deduction, are “below-the-line” itemized deductions, which means they only benefit you if you itemize instead of taking the standard deduction.
- SALT deduction cap (Schedule A): The state and local tax (SALT) cap is $40,400 for 2026 ($20,200 if married filing separately). The income threshold where the cap starts phasing down increases to $505,000 in 2026 ($252,500 for married filing separately). The cap then increases by 1% per year after 2026 through 2029, before reverting in 2030. If you want a deeper dive, see New Tax Strategy After the SALT Deduction Limit Increase. The cap phases down for higher incomes, but it does not fall below $10,000 ($5,000 if married filing separately).
- Senior deduction (age 65+): If you are age 65 or older, you may qualify for a new $6,000 deduction per eligible person (or $12,000 for a married couple if both spouses qualify). This is on top of the existing additional standard deduction for age/blindness. It begins phasing out above $75,000 (single) or $150,000 (joint) of modified adjusted gross income.
- Qualified tip deduction: Up to $25,000 of qualified tips may be deductible, with a phaseout starting above $150,000 (single) or $300,000 (joint) of modified adjusted gross income. Eligibility depends on the IRS-defined list of tipped occupations and reporting rules.
- Qualified overtime deduction: You may be able to deduct up to $12,500 (or $25,000 for joint filers) of qualified overtime pay, with phaseouts starting above $150,000 (single) or $300,000 (joint) of modified adjusted gross income. This generally applies to the “premium” portion of overtime pay above the regular rate.
- Car loan interest deduction: You may be able to deduct up to $10,000 of interest on a loan used to purchase a qualified personal-use vehicle that meets the law’s requirements. The phaseout starts above $100,000 (single) or $200,000 (joint) of modified adjusted gross income. Leases do not qualify.
If any of these apply to you, it may be worth reviewing your withholding and your year-end planning.
Unchanged for Tax Year 2026
While many tax provisions have been adjusted for inflation in 2026, some remain unchanged from 2025. The table below highlights a few items that keep the same baseline rules and thresholds.
| Tax Provision | 2026 Value | 2025 Value | Difference |
|---|---|---|---|
| Personal Exemption | $0 | $0 | $0 |
| Limitation on Itemized Deductions | Modified limitation applies for 37% bracket ↗ | None | $0 |
| Lifetime Learning Credit Phase-Out Range | |||
| Single Filers | $80,000 to $90,000 | $80,000 to $90,000 | $0 |
| Married Filing Jointly | $160,000 to $180,000 | $160,000 to $180,000 | $0 |
Summary
The IRS inflation adjustments for 2026 help keep key tax provisions in line with rising costs. At the same time, the newer OBBBA deductions create additional planning opportunities that are easy to miss if you only focus on the annual inflation tables.
For the official IRS summary of the inflation adjustments, see IRS releases tax inflation adjustments for tax year 2026 (including OBBBA amendments) ↗.
For the IRS overview of the OBBBA provisions (including the senior deduction, tips, overtime, and car loan interest rules), see One Big Beautiful Bill provisions ↗.