IRS Announces 2026 Tax Inflation Adjustments

November 3, 2025

The IRS has announced 2026 inflation adjustments affecting more than 60 tax provisions, including higher standard deductions, updated tax brackets, and increases to credits such as the Earned Income Tax Credit, adoption credit, and employer-provided childcare credit. The standard deduction will rise to $32,200 for married couples filing jointly, $16,100 for single filers, and $24,150 for heads of household. These updates, part of the One, Big, Beautiful Bill, aim to align tax thresholds with inflation and simplify compliance for taxpayers.

Here are some of the major figures to know:

• Standard deduction: For 2026
  • Married filing jointly: $32,200
  • Single / Married filing separately: $16,100
  • Head of household: $24,150
• Tax brackets / marginal rates: For 2026
  • Top rate of 37% for single taxpayers with income over $640,600, or married filing jointly over $768,700.
  • Other example thresholds:
    • 35% for incomes over ~$256,225 (single) / $512,450 (married)
    • 32% for incomes over ~$201,775 (single) / $403,550 (married)
    • 24% over ~$105,700 (single) / $211,400 (married)
    • 22% over ~$50,400 (single) / $100,800 (married)
    • 12% over ~$12,400 (single) / $24,800 (married)
    • 10% for incomes of single individuals $12,400 or less ($24,800 for married filing jointly)
• Alternative Minimum Tax (AMT) exemption:
  • For unmarried individuals: $90,100, begins to phase out at $500,000.
  • For married filing jointly: exemption begins at $1,000,000 (phase-out) with $140,200 (?) for the joint exemption.
• Estate tax exclusion:
  • For decedents in 2026: basic exclusion rises to $15,000,000 (up from ~$13,990,000 in 2025).
• Adoption credit:
  • Maximum credit for qualified adoption expenses in 2026: $17,670 (up from $17,280 in 2025)
  • Refundable portion: up to $5,120 for tax year 2026.
• Employer-provided childcare tax credit:
  • For 2026 the maximum credit increases significantly: from $150,000 up to $500,000 (or $600,000 if the employer is a qualified small business) under OBBB.

Other indexed items

• Earned Income Tax Credit (EITC): For 2026, the maximum amount for taxpayers with three or more qualifying children increases to $8,231 (from $8,046 in 2025)
• Qualified Transportation Fringe Benefit / Qualified Parking: Monthly limit increases to $340 in 2026 (up $15)
• Health flexible spending arrangements: For 2026, employee salary reduction limit increases to $3,400 (up $100) and maximum carryover $680 (up $20)
• Medical Savings Accounts (MSAs): For self-only coverage, the annual deductible minimum increases to $2,900 (up $50) and the out-of-pocket max to $5,850 (up $150). For family coverage the deductible minimum is $5,850 (up $150) and max out-of-pocket $10,700 (up $200) for 2026.
• Foreign Earned Income Exclusion: For tax year 2026 the amount is $132,900 (up from $130,000)
• Annual exclusion for gifts: Remains at $19,000 for 2026; but for gifts to a non-U.S. citizen spouse, increases to $194,000 (up $4,000) for calendar year 2026.

Items not adjusted

• Personal exemptions remain at zero for tax year 2026 (this elimination was made permanent by OBBB).
• The prior elimination of the limitation on itemized deductions remains in effect for highest tax bracket (37%) taxpayers.
• The modified adjusted gross income (MAGI) phase-out thresholds for the Lifetime Learning Credit have not been indexed for inflation; they remain at MAGI between $80,000-$90,000 (single) / $160,000-$180,000 (joint) for tax years after 2020.

​​​​​Find more details here.