IRS Inflation Adjustments for Tax Year 2026
WebCE Staff
By
November 10, 2025
The IRS has released tax inflation adjustments for tax year 2026. Each year, the IRS updates more than 60 tax-related dollar amounts as required by law. From tax brackets and deductions to credits and thresholds, these adjustments are meant to keep each amount aligned with inflation and recent legislation.
For tax year 2026, the IRS issues its annual adjustments through Revenue Procedure 2025-32, incorporating changes enacted by the One Big Beautiful Bill Act (OBBBA). These adjustments apply to returns taxpayers will file in 2027
This overview highlights the most important changes for taxpayers and tax professionals.
How IRS Inflation Adjustments Work
Most inflation adjustments are calculated using the chained Consumer Price Index for All Urban Consumers, also known as the chained CPI-U. Each year the IRS applies this formula to more than 60 tax-related amounts. These include tax brackets, standard deduction, earned income tax credit, foreign earned income exclusion, flexible spending account limits, and certain estate and gift tax thresholds.
Because these adjustments happen every year, many of the 2026 changes follow familiar patterns. The OBBBA, however, introduced several new statutory amounts, clarified the future of specific provisions, and raised certain limits for 2025 and 2026. The combination of annual indexing and recent legislative changes results in a more substantial set of changes than in typical years.
Standard Deduction
The standard deduction will rise again in 2026, reflecting both inflation and statutory increases under the OBBBA:
Single or Married Filing Separately: $16,100
Married Filing Jointly: $32,200
Head of Household: $24,150
The OBBBA also set new standard deduction amounts for tax year 2025, which will apply to returns taxpayers will file in 2026 and include:
Single or Married Filing Separately: $15,750
Married Filing Jointly: $31,500
Head of Household: $23,625
Taxpayers who are 65 or older or blind can add an extra standard deduction on top of the base amount:
Single or Head of Household: $2,000
Married: $1,600 per qualifying individual
2026 Income Tax Brackets
Income thresholds for each bracket have been adjusted for inflation. The top tax rate remains 37% for tax year 2026.
37% for incomes above $640,600 (single) or $768,700 (married filing jointly)
35% for incomes above $256,225 (single) or $512,450 (married filing jointly)
32% for incomes above $201,775 (single) or $403,550 (married filing jointly)
24% for incomes above $105,700 (single) or $211,400 (married filing jointly)
22% for incomes above $50,400 (single) or $100,800 (married filing jointly)
12% for incomes above $12,400 (single) or $24,800 (married filing jointly)
10% for incomes at or below $12,400 (single) or $24,800 (married filing jointly)
Key Adjustments and Expansions for 2026
Other notable updates for tax year 2026 include:
Alternative Minimum Tax (AMT)
AMT exemption for single taxpayers: $90,100
AMT exemption for married filing jointly: $140,200
Phaseout begins at $500,000 for single filers and $1,000,000 for joint filers
Estate Tax
The basic exclusion amount is $15,000,000 for estates of decedents who die in 2026.
This reflects the statutory reset under the OBBBA, which replaced the 2025 figure of $13,990,000.
Inflation adjustments for the estate tax will resume beginning in 2027 based on the new $15,000,000 baseline.
Adoption Credit
Maximum credit: $17,670
Refundable portion: $5,120
Employer-Provided Childcare Credit
Maximum credit rises to $500,000
Increases to $600,000 for eligible small businesses
Earned Income Tax Credit (EITC)
Maximum EITC for taxpayers with three or more qualifying children: $8,231
Detailed thresholds and phaseouts appear in Revenue Procedure 2025-32.
Qualified Transportation Fringe Benefit
Monthly limit: $340
Monthly qualified parking limit: $340
Health Flexible Spending Arrangements (FSAs)
Employee salary reduction limit: $3,400
Maximum carryover for plans that permit it: $680
Medical Savings Accounts (MSAs)
Self-only coverage
Deductible range: $2,900 to $4,400
Maximum out-of-pocket expense: $5,850
Family coverage
Deductible range: $5,850 to $8,750
Maximum out-of-pocket expense: $10,700
Foreign Earned Income Exclusion
New limit: $132,900
Annual Gift Exclusion
Annual exclusion remains $19,000
Gifts to a noncitizen spouse increase to $194,000
Items Not Adjusted for 2026
Some tax items do not receive inflation adjustments, either because statute fixes the amounts or because recent legislation changed the underlying rules.
Personal Exemption
The personal exemption remains at zero. The OBBBA made its elimination permanent, although it does not affect the senior deduction created by the bill.
Itemized Deduction Limitations
The previous suspension of the limitation for tax years 2018 through 2025 is now permanent. Taxpayers in the highest bracket (37 percent) will face a cap on the tax benefit from itemized deductions.
Lifetime Learning Credit
MAGI phaseout amounts remain unchanged. The credit begins phasing out for single taxpayers at $80,000 and fully phases out at $90,000. For joint filers, the phaseout range is $160,000 to $180,000.
Official IRS Resources
For readers who need the full details or want to review the primary sources, the following links provide authoritative information:
Prepare for Tax Year 2026 with Confidence
Inflation adjustments for tax year 2026 influence everything from client planning strategies to annual projections and compliance reviews. Staying current with each year’s updates helps tax professionals deliver accurate, timely guidance.
If you want structured learning that incorporates the newest IRS rules and practical applications, WebCE’s tax and accounting CPE courses are updated with current guidance to support your professional growth.