As tax season begins, many taxpayers are focused on completing their current filings. At the same time, it is equally important to look ahead to the 2026 tax year, which will be filed in early 2027. Several confirmed federal tax adjustments will apply to 2026 returns, largely driven by inflation indexing and recent legislation that made many existing provisions permanent.
Although these changes are incremental rather than dramatic, they can meaningfully affect taxable income, eligibility for deductions and credits, and overall tax planning strategies. Understanding what is changing—and addressing those changes early—remains one of the most effective ways to manage tax exposure.
This column highlights the most relevant federal tax updates for 2026 and explains why proactive planning continues to matter.
Key Tax Changes to Watch in 2026
For most taxpayers, the most significant updates for 2026 involve inflation-adjusted thresholds rather than new tax rates.
Key changes include:
- Standard deduction increases
The standard deduction rises to $16,100 for single filers and married filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household. Taxpayers age 65 or older may qualify for additional age-based deductions. - Adjusted federal income tax brackets
Marginal tax rates remain the same, but each bracket applies to a higher income range. This reduces the impact of bracket creep and may allow more income to be taxed at lower rates. - Alternative Minimum Tax (AMT) updates
The AMT exemption increases to $90,100 for single filers and $140,200 for joint filers, with higher phase-out thresholds. While fewer taxpayers are subject to AMT today, high-income households should still review exposure annually. - Earned Income and Child Tax Credits
The maximum Earned Income Tax Credit increases to $8,231 for taxpayers with three or more qualifying children. The Child Tax Credit remains $2,200 per qualifying child, with up to $1,700 refundable, and continues to be indexed for inflation. - Capital gains tax thresholds
Long-term capital gains rates remain at 0%, 15%, and 20%, but with higher income thresholds. This affects taxpayers selling investments, real estate, or other appreciated assets. - Qualified Business Income (QBI) deduction
The 20% QBI deduction for pass-through businesses remains permanent. Income-based phase-outs begin at $201,775 for single filers and $403,500 for joint filers. - Estate and gift tax limits
The federal estate tax exclusion increases to $15 million per individual. The annual gift tax exclusion remains $19,000 per recipient.
These updates underscore the importance of reviewing income levels and timing decisions before the end of the year.
Deductions and Credits That May Impact Your 2026 Return
One notable change beginning in 2026 affects charitable giving.
Taxpayers who claim the standard deduction may also deduct certain cash charitable contributions without itemizing. The deduction is capped at:
- $1,000 for single filers
- $2,000 for married couples filing jointly
For taxpayers who do itemize, new limitations and minimum thresholds apply—particularly for higher-income filers—making the timing and structure of charitable contributions more important than in prior years.
Why Strategic Tax Planning Matters More Than Ever
For 2026, tax outcomes will depend less on sweeping legislative changes and more on how income, deductions, and transactions are managed throughout the year.
Effective tax planning may involve:
- Coordinating withholding and estimated tax payments
- Timing investment sales and managing capital gains and losses
- Structuring retirement contributions around income thresholds
- Evaluating whether deductions should be accelerated or deferred
Once filing season begins, many of these opportunities are no longer available. Planning ahead allows taxpayers to make informed decisions rather than reactive ones.
Additional Considerations for More Complex Financial Situations
Certain taxpayers should take particular care when planning for 2026, including those with:
- Multiple income sources, such as wages, self-employment income, bonuses, or investments
- Business income from pass-through entities or multi-state operations
- Significant investment activity or real estate transactions
- Assets or income outside the United States, which may trigger additional reporting and compliance requirements
In these cases, early coordination between tax planning and broader financial decisions is especially important.
Planning for the 2026 Tax Season with Song Law Firm’s Tax Team
Due to inflation-driven threshold changes and increasingly detailed deduction rules, tax compliance in 2026 will require more careful review than in prior years.
Song Law Firm’s Tax Team provides comprehensive tax services for individuals, families, and businesses, including tax advisory services, tax planning, return preparation, and ongoing compliance support. Through a tailored and detail-oriented approach, we help clients manage their tax matters with clarity and confidence.
If you are preparing for changes to the 2026 tax system or seeking to refine your long-term tax strategy with a more sophisticated level of service, contact us today at 201-461-0031 or mail@songlawfirm.com. Song Law Firm’s Tax Team will be your trusted tax partner throughout the process.
Disclaimer: This column is provided for general informational purposes only and does not constitute legal or tax advice. The information contained herein may not apply to your specific circumstances. Reading this column does not create an attorney-client relationship. You should not act or refrain from acting based on this information without seeking professional advice specific to your situation.
