2026 Tax Changes: What You Need to Know

When you file in 2027, the 2026 tax year will reflect both annual inflation indexing and structural updates from the One Big Beautiful Bill Act (OBBBA). Those changes influence refunds and amounts owed across brackets, standard deductions, senior benefits, health savings, and long-term savings for children.

Getting ahead of 2026 rules lets you fine-tune withholding and take full advantage of deductions and credits so you can lower your taxable income where it matters most.

Understanding Federal Income Tax Rate Changes for 2026

Income is taxed in tiers at marginal rates. Each year the IRS shifts bracket boundaries for inflation so that cost-of-living gains alone do not push people into higher rates.

2026 Federal Income Tax Brackets

In 2026 the seven marginal rates stay the same; only the income cutoffs move up. As a result, a larger share of income can fall into lower brackets compared with earlier years.

Even with modest pay increases, the higher thresholds often mean a slightly lower effective rate for 2026.

Standard Deduction Increases for the 2026 Tax Year

Filers who take the standard deduction get a direct cut to taxable income—one of the biggest levers in the code for non-itemizers.

2026 Standard Deduction Amounts

Under the OBBBA, inflation bumps the standard deduction upward for every filing status in 2026.

Most people can skip itemizing and still get solid tax savings from these higher amounts.

Additional Standard Deductions for Seniors and the Blind

Seniors 65 or older qualify for two separate deductions in 2026; using both can substantially lower taxable income.

Regular Additional Standard Deduction for Age or Blindness

If you are 65 or older or legally blind, you get an extra amount on top of the standard deduction. This amount does not phase out with income. For 2026:

If you are 65 and blind you get twice the amount shown. Two qualifying spouses (65+ and blind) can add $6,600 in extra deduction.

$6,000 Bonus Senior Deduction (2025–2028)

The OBBBA also added a temporary $6,000 bonus per qualifying senior for 2025–2028—$6,000 for one qualifying spouse, $12,000 for two. This bonus phases out above $75,000 MAGI (single) and $150,000 (married filing jointly); above those levels it tapers to zero.

Why Senior Deductions Matter in 2026

Together, the standard deduction plus the regular and bonus senior amounts can trim more than $45,000 from taxable income for a married couple over 65 under the phaseout. For retirees on fixed or moderate income, that can mean much lower federal tax.

Alternative Minimum Tax Adjustments for 2026

The Alternative Minimum Tax (AMT) requires higher-income taxpayers to pay at least a minimum federal tax even when deductions and credits shrink regular tax. Exemption amounts are indexed for inflation every year.

2026 AMT Exemption Amounts and Phaseouts

In 2026 the AMT exemption is $90,100 (single) and $140,200 (married filing jointly). The exemption phases out once alternative minimum taxable income tops $500,000 (single) or $1,000,000 (joint). Higher exemptions and phaseout thresholds in 2026 reduce the chance that wage growth or inflation alone pushes middle-income filers into the AMT.

State and Local Tax (SALT) Deduction Increase

Under the OBBBA, the SALT deduction is much larger in 2026. Itemizers can deduct certain state and local taxes (income, sales, property) from federal income. The TCJA had capped this at $10,000 for everyone; in 2026 the cap is $40,400 for most filers—roughly four times the old cap. Married filing separately: $20,200 (half of the joint cap).

The higher cap phases down as income rises: above $500,000 MAGI the benefit shrinks, and at very high income it can move back toward the $10,000 cap. Filers in high-tax states (e.g., California, New York, New Jersey) who itemize get the most from this change; some may find it worthwhile to itemize who would not have before.

Estate and Gift Tax Changes in 2026

Estate and gift limits are inflation-adjusted. For 2026 the federal estate tax exclusion is about $15 million per person, so few estates owe federal estate tax below that. The annual gift exclusion stays at $19,000; the exclusion for gifts to non–U.S. citizen spouses goes up for 2026, which helps international families and cross-border planning.

Charitable Contributions Changes for 2026

From 2026 on, filers who use the standard deduction can take a limited above-the-line deduction for cash donations to qualifying public charities: up to $1,000 (single) or $2,000 (married filing jointly). That opens a charitable tax break to millions who do not itemize.

Itemizers see new rules: only charitable gifts above 0.5% of AGI count on Schedule A (e.g., with $200,000 AGI, only amounts above $1,000). High-income donors also face a cap on the value of itemized deductions—top-bracket donors get 35 cents per dollar instead of 37. The 60%-of-AGI cap for cash to public charities stays; excess can carry forward up to five years. Bunching several years of giving into one can help itemizers get past the 0.5% floor and maximize the deduction.

Child and Family Tax Credits in 2026

Family credits remain a core part of the code. In 2026 the Child Tax Credit is up to $2,200 per qualifying child; the refundable Additional Child Tax Credit can reach $1,700 per child depending on income. The maximum Earned Income Tax Credit for 2026 is $8,231 for filers with three or more qualifying children (up from $8,046 in 2025). The adoption credit is $17,670 for 2026, with $5,120 refundable.

Under the OBBBA, 529 plans are broader: funds can pay for a wider range of qualified education costs (e.g., career and credential programs, apprenticeships, continuing education). K–12 qualified uses now include curriculum materials, tutoring, online learning, standardized test fees, and dual enrollment; the annual tax-free K–12 withdrawal limit rises from $10,000 to $20,000 per beneficiary.

Other Inflation-Adjusted Tax Items for 2026

Health FSA limits go up to $3,400; monthly transportation fringe benefits rise to $340. The foreign earned income exclusion for 2026 is $132,900 (up from $130,000 in 2025). Personal exemptions stay eliminated; phaseouts for education credits (e.g., Lifetime Learning Credit, $2,000 per return) are unchanged, so higher incomes can shrink eligibility over time.

Major One Big Beautiful Bill Act Provisions Affecting 2026

Besides inflation indexing, the OBBBA changes some rules for good. HSAs: people in high-deductible health plans can use telehealth before hitting the deductible without losing HSA eligibility—permanently. That benefits seniors, rural residents, and families who depend on virtual care.

Trump Accounts: from July 4, 2026, families can open these tax-advantaged accounts for children born between January 1, 2025, and December 31, 2028. Each eligible child receives a one-time $1,000 government contribution at birth. Parents and others may add up to $5,000 per year (employer contributions up to $2,500 count toward that cap). Funds grow tax-deferred and are generally locked until adulthood, when withdrawals are taxed like a traditional IRA. For children born in the eligibility window, Trump Accounts combine government-seeded savings with long-term growth.

Planning for 2026 Tax Changes

Seeing how these changes fit together helps you plan rather than scramble at filing time. Bigger standard deductions and expanded credits can lead to over-withholding for some; updating Form W-4 early in 2026 can match withholding to real liability. Self-employed and business owners can often improve outcomes by timing income and deductions under 2026 rules, especially around bracket and phaseout cutoffs.