What You Need to Know About U.S. Tax Changes in 2026

2026 will be one of the most impactful tax years in history, with the One Big Beautiful Bill Act (OBBB/OBBBA) signed in mid-2025. Together with the usual IRS indexing for inflation, an unusual mix of benefits, among others, is available for taxpayers.

The tax season for the 2026 tax year opened in late January and ran until the usual April 15 deadline. Below are some changes you should know before filing your tax.

1. Brackets and Deductions Adjustment Due to Inflation.

For each tax year, the IRS changes important limits to shield taxpayers from inflation. In 2026:

Tax rates will be adjusted upward and as a result, inflation would have less of a chance in pushing taxpayers into higher tax rates.

Starting in 2026, more of your earnings will be protected from taxes thanks to higher standard deductions:

• Single filers: $16,100
• Married filing jointly: $32,200
• Head of household: $24,150

Further deductions are available for older taxpayers (65+) and others, which shields more income and reduces effective tax bills.

These inflation adjustments occur automatically and routinely. However, for many households, they can still represent a meaningful cut in tax burden.

2. Major new deductions and credits Under New Law.

Apart from regular reports on inflation, OBBB Act will bring in new deductibles and property‑tax relief for the middle class and workers.

Reductions for Employees

New provision allows certain workers, including tipped workers or those earning overtime, to deduct up to $25,000 in their reported tips income (married filing jointly) or proportions thereof. You may also deduct overtime pay up to a similar amount.

Broadened SALT deduction

The cap on the State and Local Tax (SALT) deduction was limited to $10,000. Now, however, that cap has been raised significantly (to about $40,400, indexed to inflation), which will be a big help to taxpayers in high‑tax states.

Senior discount.

Taxpayers who are age 65 and older can claim higher deductions, which can be as much as $6,000. However, these deductions phase out at upper-income levels.

Support for Parents or Guardians of Children

The Child Tax Credit is now enhanced with larger maximum credit amounts and phaseouts for high-income taxpayers, which is good news for families with young people as dependents.

The law also contains new education tax credits associated with contributions to scholarships that offer credits of up to $1,700 for qualifying donations.

3. Changes in Wealth and Estate Planning

The exemption amounts for estate and gift taxes were set to fall sharply beginning in 2026, however, recent legislation has made the exemption levels higher and subject to inflation indexing. This is estate planning news that wealthy households may want to be aware of.

Amendments of Alternative Minimum Tax (AMT) exemptions have been made to prevent middle-income taxpayers from falling into unintended tax traps.

4. IRS Operations & Tax Filing Season Risks

Despite these tax cuts and credits, the IRS is under severe operational constraints. From IRS report 2025, fewer workers at the IRS and staffing issues could make filings harder and slow refunds.

With roughly 27% of the workforce and leadership change ongoing, there may be delayed refunds, slower phone support, and increased error rates during filing season.

Taxpayers can file early, double check the forms, and keep meticulous records to reduce delays.

5. Refunds, Withholding & Planning Tips.

Due to the implementation of many 2025 tax year changes after mid-year, the withholding tables were affected. As a result, taxpayers may receive larger refunds than expected, sometimes in the thousands of dollars during the filing season for the 2026 tax year.

However, check your withholding elections now via IRS Form W‑4 to more accurately sync tax payments with your expected liability and not give the U.S. government an interest-free loan.

Implications for Taxpayers.

• More take‑home pay: Higher standard deductions and expanded SALT and deduction benefits may lead to increased take-home pay.
• Targeted relief: Workers in service fields, old people, families with children, and the ‘high’ tax state residents may see especially meaningful savings.
• Higher thresholds: Inflation indexing usually helps protect taxpayers from “bracket creep.”
• Filing challenges: The cuts in staff and the rules in new complexity can slow down refunds and filings.