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The IRS made several meaningful tax adjustments for 2026 that could affect nearly every taxpayer. Many of these changes are tied to inflation, while others reflect newer legislation under the One Big Beautiful Bill (OBBB), which has reshaped deductions and tax credits. Understanding what's different now can help you prepare yourself financially before filing season arrives. Even small adjustments can influence how much you owe — or save — next year.
Here's a clear breakdown of the biggest tax changes heading into 2026.
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Income thresholds are rising
Federal income tax brackets shifted upward for 2026, which means more income may be taxed at lower rates if your earnings stay relatively flat.
That can slightly reduce your overall tax burden, especially if your paycheck hasn't grown much. Here are the new tax thresholds:
2026 federal income tax brackets (single | married filing jointly)
- 37%: Over $640,600 | $768,700
- 35%: Over $256,225 | $512,450
- 32%: Over $201,775 | $403,550
- 24%: Over $105,700 | $211,400
- 22%: Over $50,400 | $100,800
- 12%: Over $12,400 | $24,800
- 10%: $12,400 or less | $24,800 or less
The standard deduction is going up
The standard deduction increased again for 2026: to $16,100 for single filers (or those married filing separately), $32,200 for married couples filing jointly or surviving spouses, and $24,150 for heads of households.
This increase may directly lower taxable income for many filers since a higher standard deduction means you can shield more income from federal taxes automatically.
Retirement account contribution limits have increased
The IRS raised contribution limits for several retirement accounts in 2026, giving workers more room to save. Employees participating in 401(k), 403(b), and similar plans can now contribute up to $24,500, up from $23,500 in 2025. IRA contribution limits also increased to $7,500, up from $7,000 in 2025.
These higher caps allow savers to reduce taxable income while building long-term wealth.
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Catch-up contributions for older Americans have risen
Older workers received an even bigger boost in 2026 through higher catch-up contribution limits. Individuals age 50 and older can now contribute an additional $8,000 to workplace retirement plans, up from $7,500 in 2025, bringing the total possible contribution to $32,500. Those ages 60 through 63 qualify for an enhanced catch-up limit of $11,250.
These provisions give late savers a stronger opportunity to accelerate retirement funding.
HSA and FSA contribution limits have risen
Health-related savings accounts also received inflation adjustments for 2026. The maximum contribution to a health care FSA increased to $3,400 (up from $3,300 in 2025), and eligible participants can carry over up to $680 into the following year if they re-enroll (up from $660 in 2025).
Meanwhile, the dependent care FSA annual limit is rising to $7,500 per household, or $3,750 per individual. These changes can help families offset rising health care and childcare costs with pre-tax dollars.
The estate tax exemption is higher, and the gift tax exclusion remains the same
For 2026, the federal estate tax exemption increased significantly, reaching $15 million per individual, up from $13.99 million in 2025. That means fewer estates will owe federal estate taxes, even as asset values rise.
Meanwhile, the annual gift tax exclusion remains unchanged at $19,000 per recipient. These thresholds continue to offer flexibility for estate planning and wealth transfers.
The Earned Income Tax Credit has a higher limit
Low- and moderate-income workers may qualify for a larger Earned Income Tax Credit in 2026. The maximum EITC for households with three or more qualifying children increased to $8,231, up from $8,046 in 2025.
This refundable credit can potentially reduce taxes owed — or even generate a refund. Eligibility depends on income, filing status, and family size.
The adoption credit has increased
Families adopting a child may qualify for a larger tax break in 2026. The maximum adoption credit rose to $17,670 (up from $17,280 in 2025), covering eligible adoption-related expenses. A portion of this credit — up to $5,120 — may be refundable, depending on circumstances.
This update helps offset the rising costs associated with adoption.
Bottom line
The IRS made wide-ranging adjustments for 2026 that affect income taxes, retirement savings, health benefits, and family-related credits. Taken together, these changes could lower your taxable income or expand valuable credits if you plan ahead.
Understanding these updates now can help you avoid wasting money and make smarter decisions as you adjust your tax strategy for the year ahead.
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