October 2025 — The IRS has announced the new 2026 tax inflation adjustments, including updates from the One Big Beautiful Bill (OBBB). These adjustments affect everything from standard deductions to tax brackets and credits, shaping what your 2026 tax return will look like when you file in 2027.

Standard Deduction Increases Again

The standard deduction—the amount most taxpayers use instead of itemizing—will rise in 2026:

  • Married filing jointly: $32,200

  • Single or married filing separately: $16,100

  • Head of household: $24,150

(For 2025, the OBBB already raised these to $31,500, $15,750, and $23,625, respectively.)

This increase helps offset inflation, giving most taxpayers a slightly larger tax break next year.

2026 Federal Tax Brackets

The top tax rate remains 37%, but income thresholds are shifting higher:

  • 35% for incomes over $256,225 (or $512,450 for married couples)

  • 32% for incomes over $201,775 (or $403,550 jointly)

  • 24% for incomes over $105,700 (or $211,400 jointly)

  • 22% for incomes over $50,400 (or $100,800 jointly)

  • 12% for incomes over $12,400 (or $24,800 jointly)

  • 10% for lower incomes below those levels

That means your income will need to climb a bit higher before reaching the next tax bracket.

Key 2026 Tax Updates

  • Estate tax exclusion: Increases to $15 million per person (up from $13.99M).

  • Adoption credit: Up to $17,670 in qualified expenses per child.

  • Earned Income Tax Credit (EITC): Maximum of $8,231 for families with three or more children.

  • Employer-provided childcare credit: Expands up to $500,000 (or $600,000 for small businesses).

  • Health FSA limit: Increases to $3,400, with a $680 carryover limit.

  • Foreign earned income exclusion: Rises to $132,900.

What Stays the Same

Some rules won’t change:

  • Personal exemptions remain eliminated.

  • Itemized deduction limits are still gone for most taxpayers, though top earners have a cap on tax benefits.

What It Means for You

The IRS adjustments are designed to keep pace with inflation, protecting your purchasing power. Most taxpayers will benefit from slightly lower effective tax rates, higher deductions, and expanded credits.

If you’re planning a big life event—like adopting a child, relocating abroad, or receiving an inheritance—these numbers could impact your 2026 tax plan. It’s a good time to review your withholdings or talk to a tax professional before the year ends.