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Tax rules shift every year, but the next two filing seasons are shaping up to be especially important. With inflation adjustments, expanded credits, and several changes tied to the One Big Beautiful Bill (OBBB), taxpayers may see meaningful differences in what they owe or get back. Understanding these updates can help you avoid surprises and keep more cash in your wallet. A few changes may be beneficial for some, while others may require you to adjust your expectations.
Here's what to know as you prepare for both the 2025 and 2026 tax years.
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There's a new, higher standard deduction
The IRS increased the standard deduction for both 2025 and 2026, giving taxpayers a larger portion of their income shielded from taxes. These adjustments are tied to inflation and updated under the OBBB, so they may influence whether you itemize or take the standard deduction. Understanding the new numbers can help you estimate your tax bill more accurately. Here are the exact amounts:
Tax year 2025
- Single / Married filing separately: $15,000
- Married filing jointly / Surviving spouses: $30,000
- Head of household: $21,900
Tax year 2026
- Single / Married filing separately: $16,100
- Married filing jointly / Surviving spouses: $32,200
- Head of household: $22,500
New tax brackets for 2026
The IRS also released updated marginal tax brackets for 2026, reflecting inflation adjustments and OBBB-related updates. These changes affect how much of your income is taxed at each level, and even small shifts can influence your refund. Understanding which bracket you fall into helps you plan with more precision. Here are the IRS's exact 2026 brackets:
| Tax rate | Single | Married filing separately | Married filing jointly | Head of household |
| 10% | $0 - $12,400 | $0 - $12,400 | $0 - $24,800 | $0 - $17,700 |
| 12% | $12,401 - $50,400 | $12,401 - $50,400 | $24,801 - $100,800 | $17,701 - $67,450 |
| 22% | $50,401 - $105,700 | $50,401 - $105,700 |
$100,801 - $211,400 | $67,451 - $105,700 |
| 24% | $105,701 - $201,775 | $105,701 - $201,775 | $211,401 - $403,550 | $105,701 - $201,750 |
| 32% | $201,776 - $256,225 | $201,776 - $256,225 | $403,551 - $512,450 | $201,751 - $256,200 |
| 35% | $256,226 - $640,600 | $256,226 - $384,350 | $512,451 - $768,700 | $256,201 - $640,600 |
| 37% | $640,601 and up | $384,351 and up | $768,701 and up | $640,601 and up |
Increase in the Earned Income Tax Credit (EITC)
The Earned Income Tax Credit is also increasing, offering a slightly larger benefit for taxpayers with qualifying children. For 2026, the maximum EITC rises to $8,231 for families with three or more children, up from $8,046 in 2025.
While the change is modest, it may help boost refunds for lower-income households. Eligibility still depends on income, filing status, and family size, so reviewing the updated thresholds is important.
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Increase in estate tax credit
The IRS also raised the estate tax exclusion amount for 2026. Estates of individuals who pass away in 2026 can now exclude up to $15,000,000, an increase from $13,990,000 in 2025.
This adjustment helps shield more wealth from federal estate taxes, particularly for those with high-value property or investment holdings. Families with complex estates may want to review their existing plans to ensure they align with the new limits.
Increase in employer-provided childcare tax credit
Employers offering childcare assistance will see a larger available credit beginning in 2026. The maximum employer-provided childcare tax credit is rising significantly — from $150,000 to $500,000, or $600,000 for eligible small businesses.
This expansion may encourage more employers to offer childcare benefits, which could reduce costs for working parents. It may also influence workplace policies, depending on participation.
How to factor in taxes into your budget
As these tax changes take effect, building them into your financial plan can help you avoid surprises next April. Since deductions, brackets, and credits affect your total tax liability, small adjustments now can make a big difference later. Consider the following strategies:
Review your withholding regularly
Checking your W-4 helps ensure the right amount is being withheld throughout the year. If you expect a higher income or fewer deductions, updating your withholding can prevent a tax bill. Conversely, lowering withholding slightly may improve monthly cash flow if the numbers still work in your favor.
Prepare for shifting deductions and credits
With multiple tax credits and income thresholds changing, staying informed is essential. Reviewing how new rules impact your situation can help you anticipate whether your refund might shrink or grow. This is especially important if you claim credits tied to children, childcare, or income levels.
Reevaluate your savings goals
Changes in tax liability can impact how much you may need to save for emergencies or retirement. Adjusting your contributions now ensures your budget keeps pace with evolving tax rules. It also gives you more flexibility if credits or deductions decrease in future years.
Bottom line
IRS updates for 2025 and 2026 may affect how much you owe, how much you save, and which credits you qualify for — so staying informed is more important than ever. From higher standard deductions to expanded credits, these changes offer new opportunities but also require thoughtful planning.
By reviewing the new rules and adjusting your budget early, you can prepare yourself financially and stay ahead of the curve as the next filing season approaches.
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