Inflation Adjustments for 2026

As 2026 begins, now is a good time to review key tax changes that may impact your planning for the year ahead. In October 2025, the IRS released their annual inflation adjustments for the 2026 tax year (2027 filing year). As year-end tax planning approaches, understanding these key changes can help taxpayers determine where they stand for the upcoming year and make necessary adjustments to maximize potential tax-saving opportunities. Let’s take a look at the upcoming adjustments.

Changes in Personal Income Tax Brackets & Tax Rates

The chart below displays the new 2026 income levels matched to their tax bracket. All seven tax rates remain the same.

2026 Federal Income Tax Brackets

Increases in Standard Deductions

2026 Standard Deduction Amounts

The additional standard deduction for taxpayers who are aged or blind remains available.

Alternative minimum Tax (AMT)

2026 AMT Exemption Amounts

Tax Credits & Itemized Deductions

2026 Inflation-Adjusted Amounts

Child Tax Credit (CTC): $2,200 per qualifying child; refundable portion $1,700
Earned Income Tax Credit (EITC):
Maximum credit for 3+ children: $8,231
Adoption Credit: $17,670 (refundable portion: $5,120)
Health FSA: Contribution limit $3,400; carryover limit $680
Foreign Earned Income Exclusion: $132,900
Medical Savings Accounts (MSA):
Self-only deductible: $2,900–$4,400
Self-only out-of-pocket max: $5,850
Family deductible: $5,850–$8,750
Family out-of-pocket max: $10,700
Medical & Dental Expense Deduction Floor: 7.5% of AGI
Charitable Cash Donations: 60% AGI limit remains

Qualified Business Income Deduction (Section 199A)

2026 QBI Thresholds & Phase-In Ranges

Federal Estate Tax Unified Credit & Gift Exclusions

Estate Tax Exclusion for 2026: $15,000,000
Annual Gift Exclusion: $19,000 per recipient
Gift to Non-Citizen Spouse Exclusion: $194,000

Retirement Accounts

The IRS has not yet released updated 2026 retirement contribution limits (401(k), IRA, SIMPLE, etc.) in the sources provided. Once released, these will be updated accordingly.

Let Us Help You Prepare for Next Year!

These adjustments represent many of the tax provisions modified for the 2026 tax year. With a constantly changing tax landscape and evolving economic conditions, staying informed is essential. If you would like a more in-depth discussion about how these or other tax provisions may affect you, please contact our office. We are always ready to assist you in developing a sound tax plan for the future.

GRIFFING & COMPANY, P.C.

(281) 491-8866 Fax (281) 491-8998

info@griffing.com

www.griffing.com