What Do the 2026 Cost-of-Living Adjustment Figures Mean for You?

The IRS recently issued its 2026 cost-of-living adjustments for more than 60 tax provisions. The One Big Beautiful Bill Act (OBBBA) makes permanent or amends many provisions of the Tax Cuts and Jobs Act (TCJA), including updates to deductions, thresholds, and exemptions. As you implement 2025 year-end tax planning strategies, these 2026 figures should be part of your consideration.

Individual Income Tax Rates
Tax-bracket thresholds have increased across all filing statuses, with higher brackets seeing larger dollar increases. For example, the top of the 10% bracket will rise by roughly $475 to $950, depending on filing status, while the top of the 35% bracket will increase by approximately $8,550 to $17,100.

For 2026, the ordinary income tax brackets are:

• 10% on income up to $12,400 for single filers ($24,800 for married couples filing jointly)
• 12% on income over $12,400 up to $50,400 (joint filers: up to $100,800)
• 22% on income over $50,400 up to $105,700 (joint filers: up to $211,400)
• 24% on income over $105,700 up to $201,775 (joint filers: up to $403,550)
• 32% on income over $201,775 up to $256,225 (joint filers: up to $512,450)
• 35% on income over $256,225 up to $640,600 (joint filers: up to $768,700)
• 37% on income above those amounts

The OBBBA makes these rates and brackets permanent, with annual inflation adjustments continuing.

Standard Deduction
The OBBBA permanently retains the higher standard deduction originally introduced by the TCJA and slightly increases it for inflation. In 2026, the deduction will be:

• $32,200 for married couples filing jointly
• $24,150 for heads of household
• $16,100 for singles and married couples filing separately

Long-Term Capital Gains Rates
For 2026, the long-term capital gains rates remain 0%, 15%, and 20%, depending on income level. Generally, the 0% rate applies to taxpayers in the lower income brackets, while the 20% rate applies before the top ordinary income rate.

Approximate 2026 thresholds:

• 0% for income up to about $49,450 (single) or $98,900 (joint)
• 15% for income between $49,451 and $545,500 (single) or $98,901 and $613,700 (joint)
• 20% for income above those levels

Alternative Minimum Tax (AMT)
The AMT ensures higher-income taxpayers pay at least a minimum amount of tax. Like the standard tax brackets, AMT thresholds are indexed for inflation. In 2026, the 28% rate begins at $244,500 for most filing statuses.

The AMT exemption amounts will be $90,100 for singles and heads of household, and $140,200 for joint filers—an increase over 2025. However, the phaseout thresholds for these exemptions revert to lower 2018 levels, meaning more taxpayers could be subject to AMT next year.

Child-Related Breaks
The Child Tax Credit remains $2,200 per qualifying child for 2026, with a refundable portion of $1,700. The credit begins phasing out at $200,000 of income for singles and heads of household and $400,000 for married couples filing jointly.

The Adoption Credit maximum will rise slightly to $17,670 in 2026, phasing out for modified adjusted gross income between $265,080 and $305,080.

Gift and Estate Taxes
The unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption are permanently increased to $15 million for 2026, with annual inflation indexing thereafter. The annual gift tax exclusion remains $19,000 per recipient.

Key Takeaway
Many 2026 cost-of-living adjustments trend higher, offering opportunities for potential tax relief. However, reductions in AMT exemption phaseout ranges could bring new complexity for some taxpayers. If you have questions about how these adjustments may affect your 2025 year-end planning or 2026 tax outlook, our team can help you develop strategies to make the most of these changes.