IRS Announces 2026 Tax Updates and Changes from the One Big Beautiful Bill Act
The IRS recently announced updates to tax rules for 2026, including changes due to inflation and the new One Big Beautiful Bill Act (OBBBA).
Standard Deduction Increases
Most taxpayers take the standard deduction instead of itemizing. For 2026, the standard deduction will rise to:
$16,100 for single filers
$32,200 for married couples filing jointly
For comparison, under the OBBBA, the 2025 deduction was $15,750 for singles and $31,500 for couples.
Updated Tax Brackets
The IRS also updated the income brackets for 2026 to account for inflation. The top tax rate remains 37%, applying to:
Single taxpayers earning over $640,600
Married couples earning over $768,700
Other brackets are:
35%: $256,225+ (individuals), $512,450+ (married)
32%: $201,775+ (individuals), $403,550+ (married)
24%: $105,700+ (individuals), $211,400+ (married)
22%: $50,400+ (individuals), $100,800+ (married)
12%: $12,400+ (individuals), $24,800+ (married)
10%: $12,400 or less (individuals), $24,800 or less (married)
Other Key Changes
Estate Tax: The exclusion rises to $15 million in 2026 (up from $13.99 million in 2025).
Adoption Credit: Increases to $17,670, with a refundable portion of $5,120.
Alternative Minimum Tax (AMT): Exemption is $90,100, phasing out at $500,000 for individuals and $1 million for married couples.
Employer Childcare Tax Credit: Maximum credit rises to $500,000 ($600,000 for eligible small businesses).
Earned Income Tax Credit: Maximum credit for taxpayers with three or more children rises to $8,231 (up from $8,046).
Flexible Spending Accounts (FSAs): Employee contribution limit increases to $3,400, and the carryover limit for unused funds rises to $680.
Medical Savings Accounts (MSAs)
Self-only coverage deductible: $2,900 minimum, $4,400 maximum
Out-of-pocket limit for self-only coverage: $5,850
Family coverage deductible: $5,850–$8,750
Family out-of-pocket limit: $10,700
Other Adjustments
Qualified transportation fringe benefit limit rises to $340/month
Annual gift tax exclusion stays at $19,000
Some tax items, such as personal exemptions, certain itemized deductions, and the income used for phasing out the Lifetime Learning Credit, are no longer adjusted for inflation.
This version is easier to read and highlights the most important changes for taxpayers in 2026.
Who Will Likely Benefit
Middle-Class Families
The higher standard deduction ($16,100 for singles, $32,200 for couples) reduces taxable income for most taxpayers.
Increases in the earned income tax credit and childcare tax credits help families with children.
Homeowners and Parents
Adoption credit increase and expanded employer childcare credits support families expanding or caring for children.
Flexible Spending Account (FSA) increases help cover health and dependent care expenses.
High-Income Individuals Avoiding “Bracket Creep”
Inflation-adjusted tax brackets prevent taxpayers from being pushed into higher rates simply because of rising wages.
Looks like most middle-class and working families should see some relief from inflation adjustments and the OBBBA changes. High-income taxpayers may benefit in some areas (estate tax exclusion), but overall, they will still carry significant tax responsibility.
