Additional Coverage:
- IRS Announces Changes That Will Impact Your Taxes This Year and Next (financebuzz.com)
Major Tax Rule Shake-Ups Headed Your Way for 2025 and 2026
**Uncle Sam is shaking things up, folks! ** Get ready for some notable changes in the tax landscape over the next two filing seasons.
Thanks to inflation adjustments, expanded credits, and the ever-so-important “One Big Beautiful Bill” (OBBB), what you owe or get back from the IRS could look a lot different. Understanding these updates now can help you dodge any unpleasant surprises and keep more of your hard-earned cash where it belongs – in your wallet!
While some changes might feel like a welcome boost, others could mean you need to adjust your expectations. Here’s a rundown of what’s coming for the 2025 and 2026 tax years.
1. Say Hello to a Bigger Standard Deduction
Good news for many taxpayers! The IRS has boosted the standard deduction for both 2025 and 2026, meaning a larger chunk of your income will be shielded from taxes.
These increases are linked to inflation and updated under the OBBB, which could sway your decision to itemize or take the standard deduction. Knowing these new figures can help you get a clearer picture of your future tax bill.
For Tax Year 2025:
- Single / Married filing separately: $15,000
- Married filing jointly / Surviving spouses: $30,000
- Head of household: $21,900
For Tax Year 2026:
- Single / Married filing separately: $16,100
- Married filing jointly / Surviving spouses: $32,200
- Head of household: $22,500
2. New Tax Brackets Coming in 2026
Hold onto your hats! The IRS has also unveiled updated marginal tax brackets for 2026.
These adjustments, also due to inflation and OBBB updates, will impact how much of your income is taxed at each level. Even slight shifts can play a role in whether you get a bigger refund or owe more.
Knowing where you stand can help you plan with greater accuracy.
Here are the official 2026 tax 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 |
3. Earned Income Tax Credit (EITC) Gets a Boost
Families with qualifying children could see a slightly larger benefit from the Earned Income Tax Credit. For 2026, the maximum EITC for families with three or more children jumps to $8,231, up from $8,046 in 2025.
While this increase is modest, it could mean a little extra cash for lower-income households. Remember, eligibility still hinges on your income, filing status, and family size, so it’s wise to review the updated thresholds.
4. Estate Tax Credit Sees an Increase
For those planning their legacy, the IRS has also raised the estate tax exclusion amount for 2026. Estates of individuals who pass away in 2026 can now exclude up to a cool $15,000,000, a significant jump from $13,990,000 in 2025.
This adjustment helps protect more wealth from federal estate taxes, especially for those with high-value assets. Families with complex estates should consider reviewing their plans to align with these new limits.
5. Employer-Provided Childcare Tax Credit Skyrockets
Big news for businesses and working parents alike! Employers who offer childcare assistance will see a much larger available credit starting in 2026.
The maximum employer-provided childcare tax credit is rising dramatically – from $150,000 to a whopping $500,000, or even $600,000 for eligible small businesses. This expansion could encourage more employers to offer crucial childcare benefits, potentially easing the financial burden on working parents and influencing workplace policies.
Budgeting for the New Tax Landscape
As these tax changes roll out, incorporating them into your financial plan can save you from any April surprises. Since deductions, brackets, and credits all impact your total tax liability, even small adjustments now can make a big difference later. Here are some strategies to consider:
- Review Your Withholding Regularly: Take a moment to check your W-4. This helps ensure the right amount is being withheld from your paycheck throughout the year.
If you anticipate higher income or fewer deductions, updating your withholding can prevent a tax bill. Conversely, if you’re consistently getting a large refund, lowering your withholding slightly could give you more cash flow each month.
- Prepare for Shifting Deductions and Credits: With multiple tax credits and income thresholds in flux, staying informed is key. Understanding how new rules affect your specific situation can help you anticipate whether your refund might grow or shrink.
This is especially crucial if you claim credits related to children, childcare, or your income level.
- Reevaluate Your Savings Goals: Changes in your tax liability can impact how much you need to save for emergencies or retirement.
Adjusting your contributions now ensures your budget keeps pace with evolving tax rules and provides more flexibility if credits or deductions change in the future.
The Bottom Line
The IRS updates for 2025 and 2026 are significant and could affect how much you owe, how much you save, and which credits you qualify for. From higher standard deductions to expanded credits, these changes offer both new opportunities and the need for thoughtful planning. By reviewing the new rules and adjusting your budget early, you can financially prepare yourself and stay ahead of the curve as the next filing season approaches.
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- IRS Announces Changes That Will Impact Your Taxes This Year and Next (financebuzz.com)