2026 Tax Changes: Brackets, Deductions, Retirement Limits

As we are heading into peak tax season, we wanted to write an informational blog to help our readers grasp the changes that are occurring for the 2026 tax year. While you are filing your taxes for 2025, now is a suitable time to look forward to the changes you can plan for in regard to the 2026 tax year.

We have covered some 2026 changes in previous posts at 2026 Retirement Contribution Limits and 2026 Charitable Donation Tax Changes.

How Are 2026 Tax Brackets and Standard Deductions Changing?

To start, the IRS has adjusted tax brackets and the standard deductions for inflation for the 2026 tax year. The tax rates have remained the same for the upcoming year, but the dollar amounts for the brackets have been adjusted higher. This means that if you earn the same dollar amount for 2026 as you did in 2025, you could potentially pay slightly less in taxes as more of your income would fall into the lower brackets.

This is a small inflation adjustment, so we do not expect major changes for households based on this change alone. Further, the standard deduction amounts have been slightly increased as well.

If you are not itemizing deductions for 2026 and will take the standard deduction, then you could potentially see a slightly lower taxable income amount based on this increase in deductions (IRS).

What Tax Changes Are in the One Big Beautiful Bill?

The One Big Beautiful Bill included a wide array of tax changes and we covered some of these changes in previous posts at Big Beautiful Bill Tax Changes 2025 and Tax Benefits for Parents in the Big Beautiful Bill.

There have been a handful of tax changes that are already in place for 2025, but there are some changes that will not be in effect until the 2026 tax year or that the inflation adjustments will begin in 2026.

Previously, tax filers were able to claim a deduction for each dependent on their return, but this was suspended in 2018 and was removed permanently from the OBB Bill starting in 2026. We will not see the return of these dependent exemptions. But instead, the Child Tax Credit was increased to $2,200 per child and will be indexed for inflation starting in 2026.

Also, the OBB Bill also retains the mortgage interest deduction on properties up to a value of $750,000, no initial tax on tips/overtime, increase state/local tax itemized deductions, and more tax changes. It's also important to note that the new Trump savings accounts for children will continue for those born in 2026.

What Are the 2026 Retirement Contribution Limits?

Since one of our primary goals with our clients is to help them achieve their retirement goals, we wanted to specifically include the updated information on retirement plans for 2026. We previously covered these in a recent post at 2026 Retirement Contribution Income Limits. Traditional IRA and Roth IRA contribution limits have increased up to $7,500 per person, with a $1,100 increase for those who are over age 50.

It is important to note that the income limitations and phaseouts for the Traditional and Roth IRA plans have also increased to index for inflation. 401(k) and similar employer-based plans have an annual limit of $24,500 for 2026 with an $8,000 catch up allowance for those over age 50. Health Savings Accounts also received an increase in the allowed contribution amounts!

Key Takeaways

• Tax brackets adjusted for inflation — the same income in 2026 may fall into lower tax brackets, potentially reducing your tax liability compared to 2025 with identical earnings.
• Standard deductions increased — higher standard deduction amounts mean lower taxable income for those who don't itemize, providing modest tax savings.
• Child Tax Credit increased to $2,200 per child — starting in 2026, this amount will be indexed for inflation annually, replacing the eliminated dependent exemptions.
• IRA contribution limits increased to $7,500 — both Traditional and Roth IRAs allow $7,500 contributions with a $1,100 catch-up for those over 50, and income phaseout limits have also increased.
• 401(k) limits increased to $24,500 — employer-sponsored retirement plans now allow $24,500 annual contributions with an $8,000 catch-up for those over 50.

Questions About Tax Planning?

If you have any questions about your investment portfolio, retirement planning, tax strategies, our 401(k) recommendation service, or other general questions, please give our office a call at (586) 226-2100.

Please feel free to suggest this blog post to a friend, family member, or co-worker. If you have had any changes to your income, job, family, health insurance, risk tolerance, or your overall financial situation, please give us a call so we can discuss it.

We hope you learned something today. If you have any feedback or suggestions, we would love to hear them.

Best Regards,

Zachary A. Bachner, CFP®
with contributions from Robert L. Wink, Kenneth R. Wink, and James D. Wink