The IRS recently released its annual inflation adjustments for over 60 tax provisions for tax year 2026 (returns typically filed in 2027). IRS These changes, together with the sweeping tax-law updates under the One, Big, Beautiful Bill (OBBB), mean that many taxpayers will see shifts in standard deductions, tax brackets, credits and other thresholds. At Nealy Knows Tax Services, we want to help you understand what these changes mean for you and how to prepare. Below are some of the most significant adjustments and how they may impact you.
Key Changes at a Glance
- Standard Deduction Increases
For tax year 2026:
These increases are thanks to both inflation indexing and the OBBB provisions.
- Tax Bracket Adjustments/No Rate Increase
The top individual tax rate remains at 37 %. For income thresholds (for example: single filers, incomes above $640,600; married filing jointly above $768,700) the IRS raised the inflation-adjusted thresholds to help prevent “bracket creep.” IRS - Alternative Minimum Tax (AMT) Exemption Amounts
For tax year 2026: AMT exemption for unmarried individuals is $90,100 with phase-out beginning at $500,000; for married filing jointly it is $140,200 with phase-out at $1,000,000. IRS - Estate Tax Credit / Exclusion Increase
The basic exclusion amount for estates of decedents dying in 2026 rises to $15,000,000 (up from $13,990,000 for 2025) thanks to OBBB indexing. IRS - Enhanced Benefits for Older Taxpayers
The OBBB introduces a new deduction of $6,000 for individuals age 65 or older (effective for tax years 2025-2028) in addition to the regular additional standard deduction for seniors. IRS
Why This Matters to You
- More Take-Home Potential: With higher standard deductions and higher thresholds for tax brackets, many taxpayers may reduce their taxable income and not get pushed into a higher tax bracket simply because of inflation.
- Planning Opportunity: These adjustments indicate that you should revisit your tax planning. Whether you’re an individual taxpayer, a business owner, or nearing retirement, understanding how these changes affect your situation is key.
- Senior Taxpayers Benefit: If you are age 65 or older, the new bonus deduction could offer meaningful relief — especially if you rely on Social Security income or have limited deductions.
- Estate Planning Impact: For high net-worth individuals, the increased estate tax exclusion means more planning flexibility.
- Business / Investment Considerations: While this blog focuses on individual changes, many business-related thresholds and credits are also indexed. If you own a business or are self-employed, you’ll want to review those as well.
What to Do Now
- Update your tax strategy: Review your tax withholding or estimated tax payments in light of the new thresholds so you are not caught off guard.
- Review your filing status: The head of household and standard deduction increases may change your net tax outcome — check if it makes sense for you.
- Older Filers Take Notice: If you are 65+, talk to your tax advisor about the additional deduction and how to claim it.
- Estate & High Net-Worth Planning: If your estate is near the exclusion threshold, now is a good time to review your planning tools.
- Work with a Practitioner: At Nealy Knows Tax Services, we aim to keep you informed and ahead of the curve. We can help you interpret how these changes apply to your specific situation.
Final Thoughts
The IRS inflation adjustments for tax year 2026 together with the One, Big, Beautiful Bill’s enhancements provide a timely window for taxpayers to act. Whether you are planning for retirement, managing your business, or looking to reduce your taxable income, the changes announced by the IRS are significant. Nealy Knows Tax Services is ready to help you navigate this updated tax landscape and optimize your position.
Ready to schedule your Free 15-Minute Tax Assessment? Reach out to Nealy Knows Tax Services and let us help you make sense of the changes, plan ahead, and keep more of what you earn.