2026 Tax Changes: A Simple Guide to What’s New

For 2026, tax brackets, deductions, credits, and retirement limits are all inching up with inflation—and the One Big Beautiful Bill Act (OBBBA) locks many of these rules in place. The goal: reduce “bracket creep,” give extra relief at lower incomes, and let you save more for retirement.

Tax Brackets: Same Rates, Higher Thresholds

• Seven tax rates stay: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

• The 37% bracket starts above $640,600 (single) and $768,700 (married filing jointly).

• Lower brackets (10% and 12%) get a slightly bigger inflation bump, so more of your income stays taxed at lower rates.

Example: More of a typical W‑2 paycheck stays in the 12% or 22% brackets instead of creeping into 24%.

Standard Deduction and Senior Perks

• Standard deduction in 2026:

  • Single: $16,100

  • Married filing jointly: $32,200

  • Head of household: $24,150

• Extra for seniors (65+):

  • +$2,050 if single

  • +$1,650 per qualifying spouse on a joint return

• New senior deduction: $6,000 per qualifying taxpayer, phasing out above $75,000 (single) or $150,000 (joint).

• Personal exemption stays at $0 (permanently removed).

Translation: Seniors get meaningful extra deductions; most others rely on a larger standard deduction instead of personal exemptions.

Alternative Minimum Tax (AMT)

• AMT exemption in 2026:

  • Single: $90,100

  • Married filing jointly: $140,200

• 28% AMT rate applies once AMTI exceeds $244,500 (half that for married filing separately).

• Exemptions phase out faster and start at:

  • $500,000 (single)

  • $1,000,000 (married filing jointly)

Who it hits: Mainly higher‑income households with lots of deductions; some will see a modest AMT increase versus 2025.

Key Credits: EITC and Child Tax Credit

Earned Income Tax Credit (EITC), 2026 maximums:

• No children: $664

• 1 child: $4,427

• 2 children: $7,316

• 3+ children: $8,231

Income ranges for phase‑in and phase‑out are higher, so more low‑ and moderate‑income workers qualify.

Child Tax Credit (CTC):

• Maximum: $2,200 per qualifying child.

• Refundable portion: $1,700.

• Both amounts will adjust for inflation going forward.

Impact: Working families with kids and modest incomes benefit the most.

Capital Gains: Preferential Rates Still Here

Long‑term capital gains and qualified dividends keep three rates:

• 0%

• 15%

• 20%

The income thresholds for each step up are higher in 2026, so more investment income stays in the 0% or 15% range before hitting 20%.

If you invest: This matters for when you realize gains or harvest losses in 2026.

Small Business Owners: QBI Deduction

The 20% Qualified Business Income (QBI) deduction for many pass‑through businesses is now permanent.

For 2026:

• Limits start to phase in at:

  • $201,775 (single)

  • $403,500 (married filing jointly)

• Limits fully phased in at:

  • $276,775 (single)

  • $553,500 (married filing jointly)

The phase‑in range is wider than before, making the deduction reduction more gradual.

Gifts, Estates, and Wealth Transfers

• Annual gift exclusion:

  • $19,000 per person (same as 2025).

• Gifts to a non‑citizen spouse:

  • Excluded up to $194,000.

• Estate tax exemption:

  • $15 million per person starting in 2026, indexed for inflation going forward.

Bottom line: Very large estates can pass more wealth tax‑free, while everyday gifting rules stay straightforward.

Retirement Savings: You Can Put More Away

Work plans (401(k), 403(b), 457, Thrift Savings Plan):

• Employee contribution limit: $24,500.

• Age 50+ catch‑up: $8,000.

• Total if 50+: up to $32,500.

A special higher catch‑up for ages 60–63 remains $11,250 instead of $8,000.

IRAs:

• Contribution limit: $7,500.

• Age 50+ catch‑up: $1,100.

• Phase‑out ranges for traditional IRA deductibility and Roth eligibility are all slightly higher.

SIMPLE plans:

• General contribution limit: $17,000.

• Higher limits and catch‑ups apply to “applicable” SIMPLE plans under SECURE 2.0.

Takeaway: If you’re in your peak earnings years, 2026 gives you more room to shelter income and boost future retirement income.

Quick Takeaways: What To Do Now

• Check your withholding: Wider brackets and a higher standard deduction may mean you can slightly reduce withholding without underpaying.

• Maximize tax‑favored savings: Aim for the new 401(k)/IRA limits if you can, especially if you’re 50+.

• If you own a business, revisit whether you’re getting the full 20% QBI deduction under the new 2026 thresholds.

• If you’re a senior or nearing retirement, factor in the extra senior deductions and higher retirement limits to smooth your tax bill and income plan.