“2026 tax solutions” encompass a range of changes enacted by recent legislation (the “One Big Beautiful Bill Act”) and annual IRS inflation adjustments, which include permanently extending existing tax rates and a higher standard deduction, along with introducing new, temporary deductions and increased retirement contribution limits.
Key changes and planning solutions for the 2026 tax year (for income earned in 2026 and returns filed in 2027) are outlined below:
Individual Tax Solutions and Changes
- Tax Rates and Brackets: The existing seven-bracket individual income tax structure (10% to 37%) is permanent, but the income thresholds for each bracket have been adjusted upward for inflation, which may result in less income being taxed at higher rates.
- Standard Deduction: The standard deduction has been permanently increased and adjusted for inflation.
- Single Filers/Married Filing Separately: $16,100
- Married Filing Jointly: $32,200
- Head of Household: $24,150
- New Deductions:
- Seniors: A new, temporary deduction (available through 2028) of up to $6,000 for single filers (or $12,000 for joint filers) is available for taxpayers age 65 or older, with phase-outs for higher incomes.
- Tipped Workers & Overtime Pay: A deduction for up to $25,000 in qualified tip income and a deduction for up to $12,500 in overtime wages have been introduced, also with income limitations.
- State and Local Tax (SALT) Cap: The cap for the itemized SALT deduction is raised to $40,400 for 2026 (from $10,000), a temporary change set to revert in 2030.
- Child Tax Credit: The credit remains at $2,200 per qualifying child, and the income phase-out thresholds remain high at $200,000 for single filers and $400,000 for married couples filing jointly.
- Estate Tax Exemption: The basic exclusion amount for estates has been made permanent and increased to $15 million per individual (up to $30 million for married couples).
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