The IRS has released the 2026 tax inflation adjustments, and for the first time, they incorporate the One, Big, Beautiful Bill Act provisions. If you set compensation levels, evaluate year-end bonuses, or plan for quarterly estimated taxes, these numbers should inform your decisions.
Key Numbers for 2026
The standard deduction for married filing jointly increases to approximately $32,300, and for single filers to approximately $16,150. Tax bracket thresholds shift upward as well, meaning slightly more of your income falls into lower rate brackets compared to 2025.
For business owners, the QBI deduction remains at 23% of qualified business income for pass-through entities (S-Corps, partnerships, LLCs, and sole proprietorships), now permanently set under the OBBBA. The Section 179 expensing limit adjusts for inflation, and the estate and gift tax exemption continues to increase.
Retirement Contribution Limits
Retirement plan contribution limits typically receive inflation adjustments in late October. While the 2026 numbers are being finalized, business owners should plan for potential increases to 401(k) employee deferral limits, SEP-IRA contribution maximums, and catch-up contribution amounts for participants over 50. SECURE 2.0 also introduced enhanced catch-up contributions for participants aged 60 to 63, which first applied in 2025 and will continue into 2026 with inflation adjustments.
SALT Deduction Planning
The $40,000 SALT deduction cap applies to taxpayers with AGI under $500,000. With the new bracket thresholds, some business owners may find themselves close to the $500,000 line. If you are in this range, evaluate whether deferring income or accelerating deductions could keep you under the cap and maximize your SALT benefit.
Estimated Tax Implications
If your income is growing, the higher bracket thresholds mean your estimated tax payments may need adjustment. The safe harbor remains: pay at least 90% of your current year tax or 100% of your prior year tax (110% if your AGI exceeded $150,000). Use the 2026 brackets when calculating your Q1 2026 estimated payment due April 15.
These numbers set the foundation for your 2026 tax planning. Incorporate them into your projections now rather than discovering opportunities in April when it is too late to act on most of them.