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Internal Revenue Service (IRS) Changes made under the One Big Beautiful Bill Act (OBBBA) were announced Thursday, along with annual inflation adjustments to dozens of tax provisions.
The changes announced by the IRS primarily apply to Tax year 2026.
The standard deduction claimed by most taxpayers who don’t itemize their returns will increase to $16,100 for single taxpayers and $32,200 for married couples filing jointly in tax year 2026. The OBBA has increased the standard deduction for the 2025 tax year to $15,750 for single filers and $31,500 for couples filing jointly.
Adjustments were made to the IRS’s marginal tax brackets, with the income limits applying to different tax rates updated to take into account inflation.
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The IRS’s annual adjustment for the 2026 tax year accounts for inflation as well as recent changes in tax law. (Michael Bocchieri/Getty Images/Getty Images)
The top tax rate remains at 37% for the 2026 tax year and applies to single taxpayers with income over $640,600 or married joint filers with income over $768,700. Other tax brackets and rates apply as follows:
- 35% for income over $256,225 for individuals and $512,450 for married filers;
- 32% for income over $201,775 for individuals and $403,550 for married filers;
- 24% for income over $105,700 for individuals and $211,400 for married filers;
- 22% for income over $50,400 for individuals and $100,800 for married filers;
- 12% for income over $12,400 for individuals and $24,800 for married filers;
- 10% for income of $12,400 or less for individuals or $24,800 for married filers.
Other notable changes made under the OBBBA include property tax The exclusion, which will be set at $15 million for estates of decedents who die in 2026. This is an increase from the $13.99 million exclusion that went into effect in 2025.
The adoption credit will increase to $17,670 in tax year 2026, up from $17,280 in 2025, while the refundable credit will amount to $5,120.
The exemption amount for the alternative minimum tax will be set at $90,100 and will phase out at $500,000 for individuals or $140,200 for married couples and phase out at $1 million.
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The IRS makes annual adjustments to certain tax policies to account for inflation and prevent a phenomenon called “bracket creep.” (Kayla Bartkowski/Getty Images/Getty Images)
Additionally, the OBBBA increased the maximum amount of the employer-provided childcare tax credit from $150,000 to $500,000 (or $600,000 if the employer is an eligible small business).
Other tax provisions that are changing due to the annual indexing process include the Earned Income Tax Credit, which will increase to a maximum credit amount of $8,231 for eligible taxpayers with three or more children, an increase from $8,046 in tax year 2025.
The voluntary employee payroll deduction limit for contributions to the Health Flexible Spending System will increase to $3,400 in tax year 2026, an increase of $100 from last year. cafeteria plan Those that allow carryover of unused amounts will have a maximum carryover of $680, $20 more than in 2025.
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President Donald Trump and Republican lawmakers created the One Big Beautiful Bill Act, which reformed some tax policies. (Samuel Corum/Getty Images/Getty Images)
Taxpayers who have only their own coverage medical savings account The deduction must be at least $2,900 in tax year 2026, which is $50 more than this year, but no more than $4,400, which is a $100 increase from this year. The maximum out-of-pocket expense amount for self-only coverage will increase by $150 to $5,850 in 2026.
For family coverage with Medicare savings accounts, the annual deduction will range from $5,850 to $8,750, while the out-of-pocket limit will be $10,700 in tax year 2026.
The monthly limit for qualified transportation fringe benefits will increase by $15 to $340 in tax year 2026.
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The annual exclusion for gifts will remain unchanged at $19,000 for tax year 2026.
Some tax provisions that were indexed for inflation in the past are no longer adjusted. These include personal exemptions, itemized deductions, and the income measure used to phase out the lifetime learning credit.
