2026 Federal tax changes: What to know before you file
The tax code changes like shifting sands, constantly redefining the landscape. And the rules impacting the 2026 tax year are no exception. A combination of changes may affect individuals, families, and business owners. While some are a matter of annual routine, others are driven by permanent provisions of the One, Big, Beautiful Bill (OBBB). Several provisions first became effective for the 2025 tax year, and they remain important for 2026.
The IRS has announced inflation adjustments for more than 60 tax provisions for tax year 2026. These amounts generally apply to the federal income tax returns taxpayers will file in 2027. In addition, taxpayers should be aware of changes involving charitable deductions, the qualified business income deduction, energy tax credits, and several other areas.
Here are some of the 2026 federal tax changes worth knowing about.
1. The standard deduction is higher
As happens most years, the standard deduction has increased to account for inflation.
For tax year 2026, the standard deduction is:
- $32,200 for married couples filing jointly
- $16,100 for single taxpayers and married taxpayers filing separately
- $24,150 for heads of household
That is an increase from the 2025 amounts of $31,500 for joint filers, $15,750 for single and married-filing-separately taxpayers, and $23,625 for heads of household.
Because most taxpayers claim the standard deduction rather than itemizing, these increases will affect a large number of 2026 returns.
However, a higher standard deduction doesn't automatically mean itemizing is off the table. Changes to the state and local tax deduction and charitable contribution rules could make it worthwhile for some taxpayers to compare the two methods when preparing their returns.
2. Federal income tax brackets inflation adjustments
Inflation adjustments to the brackets are intended to help prevent taxpayers from being pushed into higher tax brackets simply because their income increased with inflation. The seven individual federal income tax rates remain 10%, 12%, 22%, 24%, 32%, 35%, and 37%, but the income ranges to which those rates apply have been adjusted for inflation.
For example, for 2026 the top 37% rate begins at taxable income above $640,600 for single taxpayers and $768,700 for married couples filing jointly.
An important point about tax brackets is that moving into a higher bracket does not mean all of your income is suddenly taxed at that higher rate. Federal income taxes use a marginal rate system, so only the portion of taxable income falling within each bracket is taxed at that bracket's rate.
3. The state and local tax deduction remains significantly higher
One of the more notable recent changes for taxpayers who itemize deductions involves the federal deduction for state and local taxes, commonly known as the SALT deduction. The SALT deduction can include qualifying state and local income taxes—or state and local sales taxes—as well as certain real and personal property taxes.This change can be especially significant for homeowners and taxpayers in areas with higher property or state income taxes.
The previous $10,000 cap was increased beginning with the 2025 tax year. For tax year 2026, the general SALT deduction cap is $40,400 for single filers and married couples filing jointly, and $20,200 for married taxpayers filing separately.
The higher cap begins to phase down when modified adjusted gross income exceeds $505,000, or $252,500 for married taxpayers filing separately, and it generally cannot fall below the prior-law cap of $10,000, or $5,000 for married taxpayers filing separately.
Taxpayers must itemize deductions to benefit from the SALT deduction. For some households, the larger potential SALT deduction may change the calculation of whether itemizing deductions produces a better result than claiming the standard deduction.
4. Charitable giving rules change in 2026
Charitable contributions are one area where 2026 brings changes for both taxpayers who take the standard deduction and those who itemize.
Beginning in 2026, taxpayers who do not itemize deductions may be able to deduct qualifying cash contributions to eligible charitable organizations. That creates a potential federal income tax benefit for charitable giving even when a taxpayer claims the standard deduction.
Beginning in 2026, taxpayers who claim the standard deduction may generally deduct up to $1,000 of qualifying cash contributions to eligible charitable organizations, or up to $2,000 for married couples filing jointly. This special deduction does not apply to every type of donation or every charitable recipient.
At the same time, a new limitation applies to taxpayers who itemize. Beginning in 2026, charitable contributions are generally deductible only to the extent they exceed 0.5% of adjusted gross income, subject to the other rules and limitations governing charitable deductions.
For taxpayers who regularly make significant charitable gifts, these changes make year-end planning particularly important. The timing and form of a charitable contribution—cash, appreciated securities, or another method—can produce different tax consequences.
As always, taxpayers should retain appropriate documentation for charitable contributions and confirm that the recipient is an eligible organization.
5. Individual deductions continuing in 2026
Several high-profile deductions enacted in 2025 continue to apply for tax year 2026:
- Tips and overtime: Eligible workers who receive qualified tips may be able to deduct up to $25,000 of qualifying tip income. Eligible workers receiving qualified overtime compensation may deduct up to $12,500, or up to $25,000 for married couples filing jointly.
- Vehicle loans: Certain taxpayers may be able to deduct up to $10,000 of qualifying interest paid on a loan used to purchase an eligible new vehicle for personal use. The vehicle must meet specific requirements, including final-assembly requirements, and the deduction is subject to income-based phaseouts and other rules.
- Taxpayers age 65 and older: Senior taxpayers may also qualify for a temporary additional deduction of up to $6,000\$6,000$6,000 per eligible individual, subject to filing-status, income, and other requirements.
Despite shorthand descriptions such as "no tax on tips" or "no tax on overtime," these provisions don't necessarily make all tips, overtime pay, or vehicle interest tax-free. Each deduction has eligibility requirements, income phaseouts, and other limitations. Those are important factors when estimating the tax benefit.
6. The qualified business income deduction is here to stay
Business owners also received an important measure of certainty. The qualified business income deduction, often called the QBI deduction or Section 199A deduction, was made permanent under legislation enacted in 2025. Without legislative action, the deduction had been scheduled to expire after 2025.
The QBI deduction can allow eligible owners of sole proprietorships, partnerships, S corporations, and certain other pass-through businesses to deduct a portion of qualified business income, subject to various rules and limitations.
Beginning in 2026, the phase-in ranges for certain QBI limitations expand. In addition, taxpayers who materially participate in one or more qualified trades or businesses and have at least $1,000 of qualified business income may qualify for a minimum QBI deduction of $400, subject to applicable rules.
For business owners, this is more than a tax-return preparation issue. QBI planning can interact with taxable income, retirement contributions, wages, business structure, and other year-end decisions. That makes it an appropriate topic to discuss with your tax advisor before the year closes rather than after the return is already being prepared.
7. The child tax credit remains at its higher level
Families should also be aware of changes to the Child Tax Credit.
The maximum Child Tax Credit is $2,200 per qualifying child for 2026, subject to eligibility requirements and income limitations. The credit begins to phase out for taxpayers above specified income levels.
Recent legislation also made the higher Child Tax Credit structure permanent rather than allowing it to revert to the lower rules that otherwise would have taken effect.
Taxpayers should pay particular attention to identification requirements. To qualify, the child must have a Social Security number valid for employment. The taxpayer claiming the credit must also meet applicable taxpayer-identification requirements; for a married couple filing jointly, at least one spouse generally must have a Social Security number valid for employment.The credit generally begins to phase out when modified AGI exceeds $200,000, or $400,000 for married couples filing jointly.
Families whose circumstances were impacted during the year through such events as birth, adoption, marriage, divorce, or a change in custody should make sure those changes are considered in their year-end tax planning.
8. Some residential energy tax credits are no longer available
Homeowners planning energy improvements should be aware of an important change.
The Energy Efficient Home Improvement Credit is not available for qualifying property placed in service after December 31, 2025. The Residential Clean Energy Credit is not available for qualifying expenditures made after December 31, 2025. Because the applicable trigger differs by credit, homeowners should confirm the relevant rules before relying on a federal tax benefit.
Those credits previously provided tax incentives for a variety of home improvements and clean-energy investments.
The Alternative Fuel Vehicle Refueling Property Credit generally is not available for property placed in service after June 30, 2026. For eligible personal-use property at a principal residence, the credit may equal 30% of the cost, up to $1,000 per charging port or other qualifying item; location and other requirements apply.
The takeaway is simple: taxpayers should not assume that a federal tax incentive available for a home or energy-related purchase in a previous year remains available in 2026. Before making a significant purchase based partly on an expected tax credit, verify the current rules.
9. Estate and gift tax amounts have increased
The federal estate and gift tax rules affect a relatively small percentage of taxpayers, but the amounts involved can make planning important for families with substantial estates.
For individuals who die in 2026, the federal basic estate tax exclusion amount increases to $15 million. This is particularly noteworthy because the higher exemption levels that had been scheduled to expire were instead extended under the 2025 legislation.
Even families well below the federal estate tax threshold may still benefit from estate planning. State estate or inheritance taxes, beneficiary designations, trusts, business succession, property ownership, and income tax consequences can all be relevant even when no federal estate tax is expected.
10. Don’t assume changes will produce a larger refund
Whenever tax laws change, it's tempting to focus on whether a particular provision will increase a refund or lower a tax bill. But tax returns don't operate one provision at a time.
A taxpayer may benefit from a larger deduction in one area while experiencing a different result elsewhere. Income, filing status, dependents, business activity, investments, itemized deductions, credits, withholding, and estimated tax payments all interact to determine the final result.
That's why the best time to understand the 2026 changes is before 2026 is over.
A tax projection can help answer questions such as:
- Are your federal income tax withholding and estimated payments still appropriate?
- Will you benefit from itemizing deductions this year?
- Are there charitable contributions or business expenses that should be addressed before December 31?
- Do recent tax-law changes affect your business planning?
- Are you eligible for deductions or credits you weren't expecting?
- Has a change in income altered your eligibility for a tax benefit?
Planning now can make filing easier later
Tax year 2026 includes both familiar inflation adjustments and more significant changes resulting from recent federal legislation. Some changes broaden deductions or preserve tax benefits that had been scheduled to expire. Others introduce new limitations or eliminate credits that were previously available.
The important point is that tax planning and tax preparation are not the same thing.
By the time your 2026 return is being prepared in early 2027, the opportunity to make many tax-planning decisions will have passed. Reviewing the rules now gives you time to understand how they apply to your situation and determine whether action is appropriate before year’s end.
If your income, family situation, investments, business activity, or financial circumstances have changed during the year, consider meeting with your tax advisor before year-end. A 2026 tax projection can help identify the changes that actually affect you and separate meaningful planning opportunities from tax-law changes that may have little impact on your return.
Questions? Contact our team. We can help.