The IRS has announced its 2026 cost-of-living adjustments for over 60 tax provisions. These changes, influenced by the One Big Beautiful Bill Act (OBBBA), make many Tax Cuts and Jobs Act (TCJA) provisions permanent and introduce new updates.
Key highlights
Individual income tax rates
Tax brackets for 2026 will rise across all filing statuses. For instance, the top of the 10% bracket increases by $475 to $950, while the 35% bracket jumps by $8,550 to $17,100. These brackets remain indexed for inflation.
Standard deduction
The standard deduction is permanently increased under OBBBA:
- Married filing jointly: $32,200
- Head of household: $24,150
- Single or married filing separately: $16,100
Long-term capital gains
Rates remain at 0%, 15%, or 20%, depending on income. The highest rate applies before the top ordinary-income rate.
Alternative minimum tax (AMT)
AMT brackets and exemptions are indexed for inflation. In 2026, the exemption amounts are $90,100 for singles and $140,200 for joint filers, with phaseout ranges reverting to lower thresholds.
Child-related breaks
The Child Tax Credit stays at $2,200 per child, with a refundable portion of $1,700. The adoption credit maximum increases to $17,670.
Gift and estate taxes
OBBBA permanently sets the gift and estate tax exemption at $15 million for 2026, indexed for inflation thereafter.
Planning ahead
With these adjustments, taxpayers may find opportunities for savings, but they should also be aware of AMT risks. Consult a tax professional for tailored strategies.
©2026
Frequently asked questions
What are the new standard deduction amounts for 2026?
In 2026, the standard deduction will be $32,200 for married filing jointly, $24,150 for heads of households, and $16,100 for singles or married filing separately.
How does the OBBBA affect tax brackets?
The OBBBA makes TCJA tax brackets permanent and adjusts them annually for inflation, resulting in higher thresholds across all filing statuses.
What is the gift and estate tax exemption for 2026?
The exemption is permanently set at $15 million for 2026, with annual inflation adjustments thereafter.