4 minute read
Ben Franklin once said, “In this world nothing can be said to be certain except death and taxes.”
Except that death does not change every year.
The IRS 2026 inflation adjustments were released on Thursday, updating more than 60 federal tax provisions, including new income-tax brackets, standard-deduction amounts, tax credits, and reporting thresholds that will affect both advisors and their clients.
The adjustments are detailed in Revenue Procedure 2025-32 and reflect important changes under the One Big Beautiful Bill Act signed into law in July 2025.
And they will apply to 2026 tax returns filed in 2027.
In mid-January 2026, Dunham will publish its annual Key Financial Data cards, summarizing these and other updates for your quick reference.
But for now, below are the key changes organized by category so you can quickly find what matters most for your practice.
Individual Income Tax Brackets and Deductions for 2026
The seven federal income tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent under the One Big Beautiful Bill Act.
Tax Brackets
The seven tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent. Key bracket thresholds for 2026:
These brackets are now permanent under the One Big Beautiful Bill Act.
Capital Gains Tax Rates for 2026
The capital gains tax rates remain 0%, 15%, and 20%, but the income thresholds have been adjusted for inflation
20% Capital Gains Rate
Income above the 15% threshold is taxed at 20%
Standard Deduction for 2026
Family Tax Credits and Education Deductions
The IRS 2026 inflation adjustments include several key updates for families and students. These changes affect credits for children, adoption, and earned income - as well as deductions for student loan interest.
Child Tax Credit
Maximum credit: $2,200 per child (increased and now permanent)
Refundable portion: $1,700
Adoption Credit
Maximum credit: $17,670
Phase-out begins: $265,080 modified AGI
Complete phase-out: $305,080 modified AGI
Earned Income Tax Credit
Maximum Credits by Family Size:
- No children: $664
- One child: $4,427
- Two children: $7,316
- Three or more children: $8,231
Education Loan Interest Deduction
Maximum deduction: $2,500
Phase-out begins: $85,000 single / $175,000 joint
Complete phase-out: $100,000 single / $205,000 joint
Retirement and Medical Accounts
Medical Savings Accounts (MSAs)
Self-Only Coverage
Minimum deductible: $2,900
Maximum deductible: $4,400
Maximum out-of-pocket: $5,850
Family Coverage
Minimum deductible: $5,850
Maximum deductible: $8,750
Maximum out-of-pocket: $10,700
Health Flexible Spending Accounts
Maximum contribution: $3,400
Maximum carryover: $680
Long-Term Care Insurance Premiums (Deductible Limits)
Age 40 or less: $500
Age 41-50: $930
Age 51-60: $1,860
Age 61-70: $4,960
Over age 70: $6,200
Estate and Gift Tax
Estate and Gift Tax Exclusion
Basic exclusion amount: $15,000,000 (increased from prior law)
Generation-skipping transfer exemption: $15,000,000
Annual Gift Tax Exclusion
General annual exclusion: $19,000 per person
Source:
- The IRS, October 9, 2025, 26 CFR 601.602: Tax forms and instructions.
Disclosures:
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc. Trust services offered through Dunham Trust Company, an affiliated Nevada Trust Company.