Catenaa, Thursday, October 16, 2025- The Internal Revenue Service (IRS) unveiled its annual inflation-based tax adjustments for the 2026 tax year on Thursday, incorporating changes introduced under the One Big Beautiful Bill Act (OBBBA).
The standard deduction will rise to $16,100 for single filers and $32,200 for married couples filing jointly in 2026, reflecting both inflation and recent legislative reforms.
Marginal tax brackets were also updated, with the top 37% rate applying to singles earning over $640,600 and joint filers over $768,700. Other rates range from 35% to 10%, with thresholds adjusted for inflation.
The OBBBA raised the estate tax exclusion to $15 million for 2026, up from $13.99 million in 2025. Adoption credits increase to $17,670, with $5,120 refundable.
The alternative minimum tax exemption rises to $90,100 for individuals and $140,200 for joint filers, with phase-out thresholds also updated.
Employer-provided childcare credits saw substantial increases, with limits climbing to $500,000, or $600,000 for eligible small businesses.
Other adjustments include the earned income tax credit rising to $8,231 for families with three or more children, health flexible spending arrangement limits increasing to $3,400 for salary reductions and $680 for carryovers, and qualified transportation fringe benefits increasing to $340 per month.
Medical savings account coverage limits also rose. For self-only plans, minimum deductibles are now $2,900 and maximum out-of-pocket expenses $5,850.
Family plan deductibles will range from $5,850 to $8,750, with maximum out-of-pocket expenses at $10,700. The annual gift exclusion remains unchanged at $19,000. Some provisions, including personal exemptions and itemized deductions, are no longer indexed for inflation.
These adjustments aim to offset inflation, prevent bracket creep, and align U.S. tax policy with recent legislative reforms under the OBBBA.
