OBBBA Changes Ahead: Key Updates for 2026 You Need to Know

Big changes are coming to your taxes—again. With the passage of the One Big, Beautiful Bill (OBBB), the IRS has announced a series of tax adjustments that will affect returns filed in 2027 for the 2026 tax year. From standard deductions to estate tax exclusions, the updates aim to align various thresholds with inflation and introduce new benefits for both individuals and businesses.

The sections below will break down the most notable changes that could impact your tax planning strategy.

Standard Deduction

The standard deduction will be higher across the board. The standard deduction will increase again in 2026, building on the 2025 bump already introduced by the OBBB.

Updated Marginal Tax Rates for 2026

The top individual tax rate of 37 percent still applies, but income thresholds have adjusted:

• 37% – Over $640,600 (Single) / $768,700 (Married Filing Jointly)
• 35% – Over $256,225 / $512,450
• 32% – Over $201,775 / $403,550
• 24% – Over $105,700 / $211,400
• 22% – Over $50,400 / $100,800
• 12% – Over $12,400 / $24,800
• 10% – Up to $12,400 / $24,800

Key Credit and Deduction Increases

Below is a roundup of updated figures for 2026 that could benefit taxpayers:

Adoption Credit

2026 Maximum: $17,670 (up from $17,280 in 2025)

Refundable portion: $5,120

Employer-Provided Childcare Tax Credit

New maximum: $500,000

Small business maximum: $600,000 (up from $150,000)

Earned Income Tax Credit (EITC)

Maximum (3+ children): $8,231
(up from $8,046 in 2025)

Transportation & Parking Benefits

Monthly limit: $340
(up from $325 in 2025)

Health FSAs (Flexible Spending Arrangements)

Contribution limit: $3,400

Carryover limit: $680
(up $100 and $20 respectively)

Medical Savings Accounts (MSAs)

Self-Only Coverage:

• Deductible range: $2,900–$4,400
• Out-of-pocket max: $5,850

Family Coverage:

• Deductible range: $5,850–$8,750
• Out-of-pocket max: $10,700

Foreign Earned Income Exclusion

2026 Limit: $132,900
(up from $130,000)

Estate & Gift Tax Updates

Estate Tax Exclusion (2026): $15,000,000
(up from $13,990,000 in 2025)

Annual Gift Exclusion: $19,000 (unchanged)

Spousal Gift (non-U.S. citizen): $194,000
(up from $190,000)

Items That Stay the Same

Certain provisions will not see updates:

• Personal Exemptions: Remain at $0, permanently eliminated under OBBB.
• Itemized Deduction Limitation: Still removed, except a cap on tax benefit for top earners.
• Lifetime Learning Credit Phaseout: MAGI thresholds unchanged since 2020
  • Single: $80,000–$90,000
  • Married Filing Jointly: $160,000–$180,000

Plan Ahead

The tax changes under the One, Big, Beautiful Bill are significant—especially for families, employers, and high-income earners. Whether it’s maximizing deductions, understanding shifting tax brackets, or making use of enhanced credits, planning for 2026 will be crucial.

Talk to a qualified tax professional at H&CO to ensure you’re taking full advantage of the new rules. The earlier you prepare, the better positioned you'll be when it comes time to file in 2027.