Discover 2026 Personal Tax Changes

Jordan Hartwell

Published: February 9, 2026 8:38 PM ET

With the implementation of the One Big Beautiful Bill Act (OBBBA), several significant changes to personal taxation will take effect in 2026. These alterations stem from earlier adjustments made by the Tax Cuts and Jobs Act (TCJA) of 2017. The following sections highlight the key tax changes families need to consider for effective financial planning.

Overview of 2026 Personal Tax Changes

Income Tax Brackets

In 2026, the Internal Revenue Service (IRS) will adjust income tax bracket thresholds to account for inflation, with an annual inflation adjustment of 2.3%. Notably, the lower brackets will see a more considerable adjustment of 4%, thereby widening them. This adjustment aims to prevent “bracket creep,” where inflation inadvertently moves taxpayers into higher tax brackets without an actual increase in real income.

Standard Deduction and Bonus Deduction

The standard deduction will remain at $16,100 for individuals and $32,200 for married couples filing jointly.
Seniors over 65 can benefit from a “bonus” deduction of $6,000, with phase-out limits set at $75,000 for individuals and $150,000 for couples.

State and Local Tax (SALT) Deductions

Taxpayers who choose to itemize can deduct up to $40,400 for state and local taxes in 2026. This cap will phase out for individuals with modified adjusted gross incomes (MAGI) exceeding $505,000.

Estate and Gift Tax Exemption

The OBBBA has increased the lifetime gift and estate tax exemption to $15 million for individuals and $30 million for couples, providing an inflation-adjusted opportunity for wealth transfer.

Charitable Contributions

Non-itemizers can now deduct charitable contributions of up to $1,000, and $2,000 for couples.
Charitable contributions must exceed 0.5% of the adjusted gross income (AGI) to be deducted for itemizers.

Changes in Gambling Loss Deductions

Starting in 2026, taxpayers can only deduct 90% of their gambling losses against winnings. This results in a tax liability on 10% of their losses, creating a situation known as “phantom income.”

Retirement Planning Implications

The 2026 tax changes will necessitate a revisiting of various retirement planning strategies. Families should consider the following adjustments:

Contributions: Roth vs. Pretax

Individuals should evaluate whether to continue with pretax contributions or switch to Roth contributions, particularly as catch-up contributions for those over 50 must now be made on a Roth basis, depending on employer policies.

Standards for Claiming Deductions

The higher standard deduction may lead many families to opt for it over itemizing. However, individuals with substantial deductible expenses should critically assess which option is more beneficial during tax season.

Charitable Giving Strategies

Families are encouraged to group smaller charitable donations into single years to exceed the new 0.5% floor or utilize qualified charitable distributions (QCDs) to effectively manage gifting strategies while capitalizing on tax efficiencies.

Lifetime Gifting Considerations

The increased lifetime exemption presents an opportunity for families to transfer wealth without incurring taxes. Proactive planning is recommended to lock in current exemption levels.

Conclusion

The OBBBA ushers in crucial changes effective in 2026 that families need to understand to enhance their financial strategies. With adjustments in income brackets, deductions, and estate tax exemptions, proactive planning and regular consultations with tax and financial advisors will be critical for optimizing tax scenarios as rules evolve.