In 2025, the U.S. tax landscape went through a significant transformation. On July 4th, the sweeping One Big Beautiful Bill Act (OBBBA) was signed into law. OBBBA began as an effort to prevent the sunset of key tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA). Indeed, OBBBA made some of the TCJA provisions permanent. However, it also brought many changes and provisions affecting families and workers.
Many of the new provisions are temporary, and so taxpayers may only be able to take advantage of them for a few years. The OBBBA changes will bring temporary tax relief to some taxpayers. The permanent provisions will bring some stability. Overall, though, it brings more complexity to tax planning. That makes it more important than ever to stay updated.
Here is a summary of the major changes for 2026. Our 2026 Key Financial Data Card provides a handy reference for these changes.
Tax brackets permanently extended and increased
The OBBB Act permanently extends the seven brackets established when the Tax Cuts and Jobs Act was passed in 2017. For 2026, the income in each bracket received an inflation adjustment of 2.3%, meaning that 2.3% more income is taxed at a lower tax bracket than it would have been last year.
FAQS
We’re happy to answer any questions you have about our firm and our processes. Here are answers to some of the questions we receive most frequently.
Higher Standard Deduction
The standard deduction for taxpayers who do not itemize increased. This adjustment is part of the annual inflation indexing. The table below compares the 2026 standard deduction with 2025.
New Senior Deduction (temporary)
Seniors aged 65 and older will receive an additional deduction. The deduction is $6,000 for single filers and $12,000 deduction for married taxpayers if both spouses are 65 or older and filing jointly. This benefit applies to standard and itemized filers. However, it begins to phase out for individuals with modified adjusted gross income of more than $75,000 and $150,000 for joint filers. This deduction will be available in the 2026, 2027 and 2028 tax years.
In addition to this new deduction, seniors will continue to receive the extra standard deduction for seniors for 2026. The amount has increased with inflation to $2,050 for single filers or $1,650 each for married joint filers who are age 65 or older. This means that a married couple both over 65 can receive up to $41,500 in deductions.
Increased SALT Deduction cap (temporary)
The OBBB Act raised the deduction cap for state and local taxes from $10,000 ($5,000 married filing separately) to $40,000 ($20,000 married filing separately) for taxpayers earning less than $500,000 in 2025, with the cap rising by 1% annually through 2029. The new cap is phased out at $500,000.
But this is a temporary feature. Beginning in 2030, the cap reverts to $10,000 ($5,000 married filing separately).
Increased Estate Tax Exemption
The estate exemption (the amount of assets someone can pass on at death without owing federal estate taxes) for individuals in 2026 is $15 million, up from a total of $13.99 Million in 2025.
The annual gift tax exclusion for 2026 remains at $19,000, without using any of the lifetime gift and estate tax exemption. If a gift tops $19,000, the excess amount can be subtracted from your lifetime gift and estate tax exemption. A married couple can combine their exclusions to gift up to $38,000 per recipient per year.
Favorable treatment for long-term capital gains and qualified dividends
This isn’t new, but is worth a reminder: Long-term capital gains, such as the profit on the sale of a stock held for more than one year, are taxed at a more favorable rate. Qualified Dividends (Dividends paid by most stocks and stock funds) are also taxed at these favorable rates.
The table below shows the rates at which these are taxed:
GUIDES
The Essential Guide to Retirement Planning
A 4-part series that answers key questions about building your plan, positioning your investments, and more.
Increased Health Savings Account contribution limits
If your health insurance plan allows for a Health Savings Account, the contribution limit for 2026 is $4,400 for self-only coverage and $8,750 for family coverage. The limits are up $100 and $200, respectively, from 2025. Those 55 and older who are not enrolled in Medicare can contribute an additional $1,000 as a catch-up contribution.
Increased IRA contribution limits
For 2026, the IRA contribution limits are $7,500 for those under age 50 and $8,600 for those age 50 or older. That is up $500 and $600, respectively, from 2025.
How to navigate the changes
Changes to tax laws, estate planning, retirement planning and investment planning are constantly happening. It pays to work with a financial advisor who you can trust to look after your best interest. At Blankinship & Foster, our Wealth Management service includes in-depth and proactive retirement and tax planning, specific to your unique situation, and objectives. Your goals deserve a clear path forward. Let’s talk about how we can help you prepare for what’s ahead. Meet with us.
ACCREDITATIONS & AWARDS
We’re proud to have been honored by some of the organizations in our industry.
Disclosure: The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice, and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites.
