The 2026 tax year brings several significant changes that affect both individual taxpayers and businesses. Our attorneys have analyzed the latest legislation and IRS guidance to help you understand what these changes mean for your tax situation.
Updated Federal Income Tax Brackets
The IRS has adjusted income tax brackets for inflation, resulting in slightly higher thresholds across all brackets. For married couples filing jointly, the 37% bracket now begins at $751,600, up from $731,200 in 2025. Single filers hit the top bracket at $626,350. These adjustments help prevent bracket creep where inflation pushes taxpayers into higher brackets without a real increase in purchasing power.
Standard Deduction Increase
The standard deduction has increased to $15,700 for single filers and $31,400 for married couples filing jointly. This continues the trend of larger standard deductions that has reduced the number of taxpayers who itemize. If your mortgage interest, state and local taxes (capped at $10,000), charitable contributions, and other itemized deductions total less than the standard deduction, you should take the standard deduction instead.
Enhanced IRS Enforcement
The IRS continues to expand its enforcement capabilities with funding from the Inflation Reduction Act. Key areas of focus for 2026 include cryptocurrency transactions, high-income non-filers, partnership audits, and foreign account compliance. The agency has hired over 5,000 new revenue agents and is deploying advanced data analytics to identify discrepancies. If you receive correspondence from the IRS, contact a tax attorney before responding.
Business Tax Changes
Several provisions affecting businesses take effect in 2026. The research and development expense amortization requirement continues, meaning businesses must spread R&D costs over five years rather than deducting them immediately. The interest expense deduction limitation under Section 163(j) remains at 30% of adjusted taxable income. Additionally, bonus depreciation drops to 40% for property placed in service during 2026, continuing the phase-down schedule.
Additional Resources
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This article is for informational purposes only and does not constitute legal advice. Contact our office for advice specific to your situation.