The US Internal Revenue Service (IRS) has announced several major changes to tax rules for 2026. These amendments were made under the recently passed “One Big Beautiful Bill Act (OBBBA).” This legislation aims to update tax rates and deductions to account for inflation, thereby reducing the tax burden on working Americans and families.
The IRS’s new announcement includes several aspects, including an increase in the standard deduction, new tax bracket limits, estate taxes, adoption tax credits, health expense plans, and childcare exemptions. Overall, these changes bring relief not only to high-income groups but also to middle-income groups.
New Standard Deduction for 2026: Relief for Tax Filers
The standard deduction is the amount that tax filers can deduct from their taxable income if they do not wish to provide detailed expense statements. This deduction is revised annually according to inflation, ensuring taxpayers receive some relief despite rising costs.
In 2026, this deduction is set at $16,100 for single taxpayers and $32,200 for married couples filing jointly. In comparison, in 2025, it was $15,750 and $31,500, respectively. This means that in 2026, all taxpayers will receive some additional relief compared to before. This change will benefit millions of middle-class families, as they will pay less in taxes and have more savings for household expenses.
New Tax Brackets: Tax Rates Based on Your Income

The IRS has kept tax rates unchanged, but the income limits for each bracket have been increased to account for inflation. This means that if your income increases slightly, you won’t necessarily move to a higher tax bracket.
The tax rates for 2026 are as follows:
- 37% tax rate—for single taxpayers earning more than $640,600 or married couples earning more than $768,700.
- 35% tax rate—for more than $256,225 (single) or more than $512,450 (married).
- 32% tax rate – $201,775 (single) / $403,550 (married).
- 24% tax rate – $105,700 (single) / $211,400 (married).
- 22% tax rate – $50,400 (single) / $100,800 (married).
- 12% tax rate – $12,400 (single) / $24,800 (married).
- 10% tax rate – $12,400 or less (single) / $24,800 or less (married).
These amendments ensure that individuals’ rising incomes are not taxed excessively and that they can retain a larger portion of their income, while accounting for the effects of inflation.
Estate Tax Exclusion: Relief for Large Investors
For those who own large assets or are succession planning, the IRS’s announcement is a welcome relief. The estate tax exclusion limit has been increased to $15 million for 2026. Previously, the limit was $13.99 million. This means that after a person’s death, their heirs will no longer be taxed on assets up to $15 million.
This amendment is particularly beneficial for families and business owners who wish to pass on large assets or shares to their heirs. This will make the estate transfer process more simple and tax-friendly.
Adoption Tax Credit: Incentives for Families
The government has provided additional tax breaks for those adopting children in 2026. The adoption tax credit has now been increased to $17,670, up from $17,280 in 2025. Additionally, $5,120 will be provided as a refundable credit. This means that if a family’s tax liability is low, they can receive this amount back in cash.
This move is encouraging for families considering adopting a child. This will not only strengthen family structure but is also a positive change from a social perspective.
Changes to the Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) is a separate system for high-income taxpayers that ensures that high-income individuals do not completely avoid taxes by taking excessive deductions.
The IRS has set the AMT exemption limits for 2026:
- $90,100 for single taxpayers
- $140,200 for married couples
This exemption will gradually phase out at incomes of $500,000 (single) and $1 million (married). This means that higher-income earners may have to pay extra under this tax.
Increase in Employer-Provided Childcare Tax Credit
Under the One Big Beautiful Bill Act, the limit on the tax credit that employers can provide for their employees’ childcare has been increased. Previously, the maximum was $150,000, but now it has been increased to $500,000.
If the employer is an eligible small business, this limit will increase to $600,000. This change will encourage companies that help employees balance their family life.
Increase in the Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a significant relief for low- and moderate-income families. The maximum amount of this credit will be $8,231 in 2026, up from $8,046 in 2025.
This credit is specifically given to families with three or more children, providing them with additional financial support after taxes. This amendment is a positive step toward reducing economic inequality.
New Limits on Health and Flexible Spending Accounts (FSAs)
The tax deduction limit for health-related expenses for employees has also been increased through 2026. The maximum contribution limit for a Health Flexible Spending Arrangement (FSA) has now been increased to $3,400, a $100 increase from last year.
For companies that allow carryovers, the limit on unused funds has also been increased to $680. This means employees can transfer their remaining funds to the next year, preventing their money from going to waste.
New Rules for Medical Savings Accounts (MSAs)
Significant changes have also been made for taxpayers who hold insurance plans within their Medical Savings Accounts.
For accounts with self-only coverage, the minimum deduction will be $2,900 and the maximum will be $4,400. The maximum out-of-pocket spending limit has been increased to $5,850.
For accounts with family coverage, the deduction limit will be between $5,850 and $8,750, while the maximum spending limit has been set at $10,700. This will make health plans more flexible and secure.
Other Tax Provisions and Fixed Limits
The monthly limit for the Qualified Transportation Fringe Benefit has been increased by $15 to $340 in 2026. This benefit is for employees who use their employers for public transportation or parking.
The gift tax exclusion limit will remain unchanged at $19,000. Certain old provisions, such as personal exemptions and itemized deductions, will no longer be adjusted for inflation. Similarly, the income limit for the Lifetime Learning Credit has also been kept constant.
Conclusion: Why the 2026 Tax Changes Are Important
These new changes announced by the IRS are a step toward a major reform of the US tax system. They not only offset the effects of inflation but also provide additional financial relief to middle- and low-income citizens.
These amendments, made under the provisions of the One Big Beautiful Bill Act, demonstrate that the government’s focus is no longer solely on increasing revenue but also on maintaining the financial well-being of citizens.
If you file taxes in the US, now is the right time to review your tax plan, understand your bracket, and learn which credits and deductions you are eligible for.
FAQs
Q. What is the purpose of the 2026 IRS tax adjustment?
A. The 2026 tax changes aim to adjust income brackets, deductions, and credits to match inflation and provide relief for middle-income taxpayers.
Q. What is the new standard deduction for 2026?
A. The standard deduction increases to $16,100 for single filers and $32,200 for married couples filing jointly.
Q. How does the Big Beautiful Bill affect families?
A. The bill expands child and adoption tax credits, making it easier for families to save more and receive higher tax benefits.
Q. Are estate and gift tax limits changing in 2026?
A. Yes. The estate tax exemption rises to $15 million, while the annual gift tax exclusion remains at $19,000.
Q. When do the new tax rules take effect?
A. The updated tax rates and deductions will officially apply to income earned in the 2026 tax year, which taxpayers will file in 2027.