2026 Inflation Adjustments to Some Taxes

Take-Away: The IRS recently published its inflation adjusted amounts for several provisions under the Tax Code starting in 2026.

Background: In Revenue Procedure 2025-32 the IRS published the inflation adjusted items for various provisions of the Tax Code. [IRC 1(f).]  Some selected adjustments that will be of interest to planners and advisors follow. (Many other changes are not reported due to the extended (dare I say tedious) scope of the Revenue Procedure.)

Estate and Gift Tax:

• Annual Exclusion Gift to Donee: $19,000 per donee (but not for gifts of future interests) [IRC 2503(b)]
• Non-Citizen Spouse Annual Exclusion Gift: $194,000 [IRC 2523(i)]
• Covered Expatriate Gift of Bequest Exclusion: $19,000 [IRC 2801(c)]
• Special Use Valuation Limitation: $1,460,000 [IRC 2032A]
• Interest on Estate Tax Payable in Installments: $1,940,000 [IRC 6601(j)]
• Expatriate Tax Avoidance {average annual net income condition}: $211,000 [IRC 877]
• Expatriate Tax Responsibilities {amount includible in gross income of expatriate}: $910,000 [IRC 877A]

Individual Income Tax and Rate Tables:  [IRC 1]

• Married Filing Jointly: 10% bracket ends at $24,800. 12% bracket ends at $100,800. 22% bracket ends at $211,400. 24% bracket ends at $403,550. 32% bracket ends at $512,450. 35% bracket ends at $768,700. 37% bracket is for any taxable income over $768,700.
• Single Filer: 10% bracket ends at $12,400. 12% bracket ends at $50,400. 22% bracket ends at $105,700. 24% bracket ends at $201,775. 32% bracket ends at $256,225. 35% bracket ends at $640,600. 37% bracket is for any taxable income over $640,600.
• Married Filing Separate: 10% bracket ends at $12,500. 12% bracket ends at $50,400. 22% bracket ends at $105,700. 24% bracket ends at $201,775. 35% bracket ends at $384,350. 37% bracket is for any taxable income over $384,350.
• Estates and Trusts: Thresholds are- not over $3,300 (10%), over $3,300 but not over $11,700 (24%), over $11,700 but not over $16,000 (35%), and over $16,000 (37% tax rate.)

Maximum Capital Gains Rates: [IRC 1(h), (1)(j)(5)]

For purposes of determining the zero (0%) percent and 15% capital gains rates, the adjusted income thresholds for 2026 are:

• Married Filing Jointly: Maximum zero (0%) rate amount $98,900. Maximum 15% rate amount $613,700.
• Married Filing Separately: Maximum 0% rate amount $49,450. Maximum 15% rate amount $306,850
• Head of Household: Maximum 0% rate amount $66,200. Maximum 15% rate amount $579,600.
• Single Filer: Maximum 0% rate amount $49,450. Maximum 15% rate amount $545,500.
• Trusts and Estates: Maximum 0% rate amount $3,300. Maximum 15% rate amount $16,250.

Standard Deduction: [IRC 63(c)(2)]

• Married Filing Jointly: $32,200
• Single Filer: $16,100
• Head of Household Filer: $24,150
• Aged or Blind additional standard deduction is $1,650. If unmarried and a widow or widower, the additional amount of standard deduction is $2,050. [IRC 63(f)]
• If an individual is claimed as a dependent, the standard deduction cannot exceed the greater of (i) $1,350 or (ii) the sum of $450 and the individual’s earned income.

AMT Exemption Amount: [IRC 55(d)(1)]

• Joint Return or Surviving Spouse: $140,200
• Unmarried Individual: $90,100
• Married Filing Separate: $70,100
• Estates and Trusts: $31,400

AMT Exemption Phaseout: [IRC 55(d)(2)]

• Joint Filing or Surviving Spouse: Threshold $1.0 million, Complete Phaseout $1,280,400
• Unmarried Individual: Threshold $500,000, Complete Phaseout $680,200
• Married Filing Separate: Threshold $500,000, Complete Phaseout $640,200
• Estates and Trusts: Threshold $104,800, Complete Phaseout $167,600

Child Tax Credit: [IRC 24]

• Maximum amount of the credit allowed: $2,200
• Amount used to determine the refundable portion of the credit: $1,700

Qualified Business Income Deduction (QBI): [IRC 199A]

• Married Filing Jointly: Threshold $403,500, Phaseout Complete $553,500
• Married Filing Separate: Threshold $201,775, Phaseout Complete $276,775
• Single Individual: Threshold $201,750, Phaseout Complete $276,750

Health and Medical Accounts: [IRC 220; IRC 9831(d); IRC 125(i); IRC 213(d)(10)]

• Medical Savings Account: Self-only coverage annual deductible $2,900, and not more than $4,400. Annual-out-of-pocket expenses cannot exceed $5,850. For family-coverage, annual deductible must be at least $5,850 and not more than $8,750. Annual out-of-pocket expenses cannot exceed $10,700.
• Qualified Small Employer Health Reimbursement Arrangement: Total amount of payments and reimbursements cannot exceed $6,450 for self-only coverage, or $13,100 for family-coverage.
• Cafeteria Plans: The dollar limit on voluntary employee salary reductions for contributions to a health flexible spending arrangement is $3,400. If carryover is permitted by the plan, the maximum carryover amount is $680.
• Eligible Long-term Care Premiums: The limitations on premiums includable as medical care are:

Age 40 or less- $500

More than 40 but less than 50- $930

More than 50 but less than 60- $1,860

More than 60 but less than 70- $4,960

More than 70- $6,200

Conclusion: Many other provisions of the Tax Code were also changed by these inflation adjustments. You are encouraged to read the entire Revenue Procedure to learn how these other changes will affect income taxes in 2026.

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