Navigating the Financial Landscape: Tax Projections for 2026

As the economic landscape continues to evolve, the U.S. Bureau of Labor Statistics has reported a consumer price index (CPI) increase of 0.4% on a seasonally adjusted basis for August, with a 12-month increase of just 2.9%. This relatively stable inflation rate will have meaningful implications for taxpayers in 2026, as Bloomberg Tax & Accounting has recently projected. These 2026 tax projections, coupled with changes from the One Big Beautiful Bill Act (OBBBA) passed in July, suggest a shift in tax brackets, deduction limitations, and other key thresholds that will affect many Americans. The adjustments represent more than just abstract numbers—they’ll translate to real financial impact for families and individuals across various income levels, with changes to everything from standard deductions to retirement account contributions.

The most immediate impact for many taxpayers will be felt in the adjusted tax brackets for 2026. The top federal income tax rate is projected to remain at 37%, with an additional 3.8% net investment income tax potentially applying to high-income individuals. Capital gains rates will stay consistent, though the income thresholds for each rate will adjust. Most taxpayers will continue paying a maximum 15% rate on long-term capital gains, with the 20% rate applying only when taxable income exceeds the threshold for the 37% ordinary tax bracket. For married couples filing jointly, the income brackets are projected to range from 10% tax on income up to $23,000, scaling through several brackets, and reaching the top 37% rate on income exceeding $693,750. For single filers, the brackets begin with 10% on income up to $11,500, ultimately reaching 37% on income over $578,125. These adjustments reflect the government’s attempt to account for inflation’s impact on taxpayer income while maintaining a progressive tax structure.

One of the most significant changes affecting everyday Americans involves standard deduction amounts, which under the OBBBA will permanently maintain the increased levels introduced by the Tax Cuts and Jobs Act. In 2026, married couples filing jointly can expect a standard deduction of $29,400, while single taxpayers and those married filing separately will see $14,700, and heads of household will receive $22,050. Additionally, seniors will benefit from a new temporary deduction of $6,000 in 2026, available to both itemizers and those taking the standard deduction. This senior deduction is subject to phase-outs beginning at $150,000 for joint filers and $75,000 for others, completely disappearing at incomes of $350,000 for joint filers and $175,000 for others. This provision serves as the practical implementation of promised tax relief on Social Security benefits. Meanwhile, the personal exemption amounts, which were eliminated by the Tax Cuts and Jobs Act through 2025, have been permanently eliminated under OBBBA, representing a structural shift in how tax liability is calculated.

Family-focused tax benefits will see meaningful adjustments in 2026 as well. The child tax credit is projected to be $2,200, with up to $1,700 potentially refundable. Parents should note that the “Kiddie Tax” will apply to children’s unearned income exceeding $1,350, though parents may elect to include that income on their own returns (rather than filing separately for their child) if it falls below $13,500. For education expenses, the student loan interest deduction will remain at a maximum of $2,500, with phase-outs beginning at $85,000 for single filers and $170,000 for joint returns. Elementary and secondary school teachers can expect a modest deduction of $350 for out-of-pocket classroom expenses. These family-oriented provisions reflect the tax code’s continued acknowledgment of the financial pressures facing American households with children and educational commitments, though some may argue the adjustments merely keep pace with inflation rather than providing additional relief.

Healthcare and retirement savings will see notable adjustments in 2026 that can significantly impact long-term financial planning. Health Savings Account (HSA) contribution limits are projected to increase to $4,400 for self-only coverage and $8,750 for family coverage. For retirement savings, traditional and Roth IRA contribution limits are expected to reach $7,500, with an additional $1,100 catch-up contribution allowed for those 50 and older. Roth IRA contribution eligibility will phase out between $144,000 and $159,000 for single filers and between $227,000 and $237,000 for married couples filing jointly. For charitable-minded retirees, Qualified Charitable Distributions (QCDs) from IRAs will exclude up to $111,000 from taxable income. Perhaps most significantly for wealthy Americans, the federal estate tax exclusion will increase to a substantial $15 million per person ($30 million per married couple), while the annual gift tax exclusion is projected to remain at $19,000 per recipient. These provisions offer important planning opportunities for Americans focused on healthcare costs, retirement security, and wealth transfer.

While these projections provide valuable guidance for tax planning, it’s important to remember they are just that—projections. The IRS will publish official tax brackets and other figures for 2026 later this year, likely in October. Nevertheless, these preliminary numbers from Bloomberg Tax offer taxpayers and financial professionals a head start on strategic planning. The interplay between inflation adjustments and legislative changes through the OBBBA creates a tax landscape that’s both familiar and new. For most Americans, the changes represent modest adjustments rather than radical overhauls, continuing the tax code’s gradual evolution to reflect economic realities. As these projections become finalized and tax season approaches, consulting with qualified tax professionals remains the best approach to navigating these changes and optimizing your financial position in light of the updated tax framework for 2026.