Each year, the Internal Revenue Service adjusts dozens of federal tax provisions to account for inflation. These changes can affect how much income is taxed, the deductions and credits available to you, and how much you can contribute to tax-advantaged accounts.
The 2026 tax inflation adjustments generally apply to income earned between January 1 and December 31, 2026. Most taxpayers will report that income when they file their federal tax returns in 2027.
The changes for 2026 also reflect provisions introduced or made permanent by the One Big Beautiful Bill Act. Here are the updates that may have the greatest impact on individuals, families and business owners.
2026 Federal Income Tax Brackets
The federal income tax system uses marginal tax rates. This means reaching a higher tax bracket does not cause all your income to be taxed at the higher rate. Only the income falling within that bracket is subject to that rate.
For 2026, the federal tax rates remain:
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10%
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12%
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22%
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24%
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32%
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35%
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37%
For single taxpayers, the 2026 brackets begin as follows:
| Tax rate |
Taxable income |
| 10% |
$0 to $12,400 |
| 12% |
Over $12,400 |
| 22% |
Over $50,400 |
| 24% |
Over $105,700 |
| 32% |
Over $201,775 |
| 35% |
Over $256,225 |
| 37% |
Over $640,600 |
For married couples filing jointly:
| Tax rate |
Taxable income |
| 10% |
$0 to $24,800 |
| 12% |
Over $24,800 |
| 22% |
Over $100,800 |
| 24% |
Over $211,400 |
| 32% |
Over $403,550 |
| 35% |
Over $512,450 |
| 37% |
Over $768,700 |
These are taxable-income thresholds, not gross-income thresholds. Deductions and other tax adjustments are generally applied before your taxable income is calculated.
The complete figures are available in the IRS 2026 tax inflation adjustment announcement.
Standard Deduction Increases for 2026
The standard deduction reduces the portion of income subject to federal income tax. The updated amounts for tax year 2026 are:
| Filing status |
2026 standard deduction |
| Single |
$16,100 |
| Married filing separately |
$16,100 |
| Married filing jointly |
$32,200 |
| Qualifying surviving spouse |
$32,200 |
| Head of household |
$24,150 |
For comparison, the 2025 standard deduction is $15,750 for single filers, $31,500 for married couples filing jointly and $23,625 for heads of household.
Taxpayers should compare the standard deduction with their eligible itemized deductions rather than automatically choosing one method. Mortgage interest, charitable contributions, qualifying medical expenses and state and local taxes may affect that decision.
Additional Deduction for Taxpayers Age 65 and Older
Eligible taxpayers who are at least 65 years old may qualify for an additional senior deduction of up to $6,000 per eligible person for tax years 2025 through 2028.
A married couple filing jointly may qualify for as much as $12,000 if both spouses meet the age requirement. The deduction begins to phase out when modified adjusted gross income exceeds:
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$75,000 for single filers
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$150,000 for married couples filing jointly
Unlike the traditional additional standard deduction, this senior deduction may be available whether an eligible taxpayer takes the standard deduction or itemizes.
Eligibility and phaseout calculations should be reviewed carefully because the actual deduction may be lower for taxpayers whose income exceeds the applicable threshold.
Personal Exemption Remains at Zero
The personal exemption remains $0 for tax year 2026. The elimination of the traditional personal exemption, originally introduced under the Tax Cuts and Jobs Act, has been made permanent.
The personal exemption should not be confused with the separate senior deduction available to certain taxpayers age 65 or older.
Earned Income Tax Credit for 2026
The Earned Income Tax Credit, commonly known as the EITC, is designed to help eligible workers and families with low to moderate earned income.
For tax year 2026, the maximum EITC for a qualifying taxpayer with three or more qualifying children increases to $8,231, compared with $8,046 for 2025.
The actual credit depends on several factors, including:
Because the credit phases in and then phases out at different income levels, receiving the maximum amount is not automatic.
Alternative Minimum Tax Exemption
The Alternative Minimum Tax, or AMT, is a separate federal tax calculation intended to limit the benefit of certain deductions and exclusions for higher-income taxpayers.
For tax year 2026:
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The AMT exemption is $90,100 for unmarried taxpayers and begins phasing out at $500,000.
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The exemption is $140,200 for married couples filing jointly and begins phasing out at $1,000,000.
Taxpayers with significant income, incentive stock options, large capital gains or certain tax preference items may need to determine whether the AMT applies.
2026 Retirement Contribution Limits
Inflation adjustments also increase the amount individuals may contribute to several retirement accounts.
401(k), 403(b), 457 and Thrift Savings Plan
For 2026, the employee contribution limit for most 401(k), 403(b), governmental 457 plans and the federal Thrift Savings Plan increases to $24,500.
The general catch-up contribution for participants age 50 or older increases to $8,000, allowing many eligible participants to contribute as much as $32,500.
Participants who are age 60, 61, 62 or 63 during 2026 may qualify for a higher catch-up contribution of $11,250.
Traditional and Roth IRAs
The annual contribution limit for traditional and Roth IRAs increases to $7,500 for 2026.
The IRA catch-up contribution for taxpayers age 50 or older increases to $1,100, allowing an eligible taxpayer in this age group to contribute up to $8,600.
Roth IRA eligibility continues to depend on modified adjusted gross income. For 2026, the contribution phaseout ranges are:
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$153,000 to $168,000 for single filers and heads of household
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$242,000 to $252,000 for married couples filing jointly
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$0 to $10,000 for married individuals filing separately who are subject to the special rule
Additional retirement limits are available in the IRS announcement covering 2026 retirement plan adjustments.
Health Savings Account Contribution Limits
For calendar year 2026, the Health Savings Account contribution limits are:
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$4,400 for self-only coverage
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$8,750 for family coverage
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An additional $1,000 catch-up contribution for eligible individuals age 55 or older
For most qualifying high-deductible health plans, the minimum annual deductible is $1,700 for self-only coverage and $3,400 for family coverage.
The maximum annual out-of-pocket expenses, excluding premiums, generally cannot exceed:
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$8,500 for self-only coverage
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$17,000 for family coverage
HSA eligibility depends on the type of health coverage a person has, not only on the plan’s deductible. The IRS 2026 HSA guidance also explains expanded HSA eligibility for certain bronze and catastrophic health plans.
Health Flexible Spending Arrangement Limit
For plan years beginning in 2026, employees may contribute up to $3,400 through salary reductions to a health Flexible Spending Arrangement.
If an employer’s cafeteria plan permits unused funds to be carried into the following plan year, the maximum permitted carryover is $680.
An FSA is generally subject to a use-it-or-lose-it rule, although a qualifying employer plan may offer a carryover or grace period. Employees should confirm the specific provisions of their employer’s plan before deciding how much to contribute.
Qualified Transportation and Parking Benefits
The monthly limit for qualified transportation fringe benefits increases to $340 for 2026. The separate monthly limit for qualified parking also increases to $340.
These benefits may allow an employer to provide or reimburse certain commuting expenses on a tax-advantaged basis when all applicable requirements are satisfied.
Annual Gift Tax Exclusion
The annual federal gift tax exclusion remains $19,000 per recipient for 2026.
A married couple may generally give a combined $38,000 to the same recipient if each spouse makes or elects to treat half of the gift as their own and all applicable requirements are followed.
Giving more than the annual exclusion does not necessarily mean gift tax will immediately be due. However, the donor may need to file Form 709, and the excess gift may reduce the donor’s lifetime estate and gift tax exemption.
For gifts to a spouse who is not a U.S. citizen, the 2026 annual exclusion increases to $194,000.
Estate and Gift Tax Exemption
For individuals who die during 2026, the federal estate tax basic exclusion amount is $15 million per individual, up from $13.99 million for 2025.
Estate planning is not limited to households that expect to owe federal estate tax. Beneficiary designations, trusts, ownership structure, business succession planning and state-level rules may still require attention.
Adoption Credit
For tax year 2026, the maximum adoption credit increases to $17,670 per eligible adoption.
Up to $5,120 of the credit may be refundable. Eligibility depends on qualified adoption expenses, income limitations and other requirements. Special rules apply to the adoption of a child with special needs.
Foreign Earned Income Exclusion
A qualifying U.S. taxpayer living and working abroad may be able to exclude up to $132,900 of foreign earned income for 2026.
Eligibility requires more than simply earning income outside the United States. The taxpayer must generally have a foreign tax home and satisfy either the bona fide residence test or the physical presence test.
U.S. citizens and resident aliens may still have federal filing and information-reporting obligations even when some or all foreign earned income qualifies for exclusion.
Medical Savings Account Limits
For self-only coverage under a qualifying Medical Savings Account plan in 2026:
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The annual deductible must generally be between $2,900 and $4,400.
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The maximum out-of-pocket expense is $5,850.
For family coverage:
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The annual deductible must generally be between $5,850 and $8,750.
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The maximum out-of-pocket expense is $10,700.
Medical Savings Accounts should not be confused with the more commonly used Health Savings Accounts. The eligibility requirements and plan structures are different.
Employer-Provided Childcare Credit
The employer-provided childcare tax credit is significantly expanded for 2026.
The maximum credit increases from $150,000 to:
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$500,000 for qualifying employers
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$600,000 for an eligible small business
This credit may be relevant to businesses considering qualified childcare facilities, contracted childcare services or childcare resource and referral expenses. Businesses should review the credit before making a major investment because only qualifying expenditures are included in the calculation.
What the 2026 Adjustments Mean for Taxpayers
Inflation adjustments are intended to reduce “bracket creep,” which can occur when higher nominal income pushes a taxpayer into a higher tax bracket even though purchasing power has not increased by the same amount.
However, higher deductions and contribution limits do not guarantee a lower tax bill. Changes in income, filing status, dependents, business activity, investments and eligibility for deductions or credits can produce a very different result.
Before the end of 2026, consider reviewing:
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Federal income tax withholding
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Quarterly estimated tax payments
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Retirement contributions
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HSA and FSA contributions
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Capital gains and losses
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Charitable giving
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Business income and deductible expenses
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Eligibility for family and education credits
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Required minimum distributions
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Estate and gift planning
Tax planning is most effective when it happens before the year ends—not when the tax return is already being prepared.
Plan Ahead With Naples Taxes
The 2026 tax inflation adjustments create new planning opportunities, but the numbers must be applied to your individual financial situation.
Naples Taxes helps individuals, families and business owners understand how federal tax changes may affect their withholding, estimated payments, deductions, retirement contributions and overall tax strategy.
If your income, business activity or family situation has changed, schedule a tax-planning consultation before year-end. A proactive review can help you avoid surprises and make informed decisions while planning opportunities are still available.
Contact Naples Taxes today to discuss your 2026 tax strategy.
This article is intended for general informational purposes and does not constitute individualized tax, legal or financial advice. Tax rules and eligibility requirements vary according to each taxpayer’s circumstances.
