As the 2026 tax year enters its final quarter, taxpayers should review new guidance following the permanence of key provisions under the One, Big, Beautiful Bill Act (OBBBA) and the latest inflation adjustments for rates and deductions.
2026 Marginal Tax Rates and Brackets
For the 2026 tax year, marginal tax rates remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These rates, originally part of the 2017 reform and made permanent by the One, Big, Beautiful Bill Act (P.L. 119-21), have been adjusted for inflation. Under Revenue Procedure 2025-32, the top 37% tax rate now applies to single taxpayers with taxable income exceeding $640,600 and married couples filing jointly with income over $768,700. Taxpayers should ensure their fourth-quarter withholdings and estimated payments align with these updated thresholds to avoid underpayment penalties.
Standard Deduction and the Increased SALT Cap
The standard deduction for 2026 has increased to $16,100 for single filers and $32,200 for married individuals filing jointly. Notably, the OBBBA increased the state and local tax (SALT) deduction limit to $40,000 ($20,000 for married filing separately), providing a significant change from the historical $10,000 cap that was in place from 2018 through 2025. With the SALT limit now four times higher, many taxpayers who previously utilized the standard deduction may find that itemizing on Schedule A offers a greater tax benefit for the 2026 tax year.
Small Business QBI and Personal Exemptions
The Section 199A Qualified Business Income (QBI) deduction, which allows eligible pass-through entity owners and sole proprietors to deduct up to 20% of their business income, is now a permanent fixture of the tax code under the OBBBA. For 2026, the threshold at which the QBI deduction begins to phase in is $201,775 for single filers. Additionally, while the Child Tax Credit remains at $2,200 per qualifying child for the 2026 tax year, the personal exemption remains at $0, following the permanent structure established by P.L. 119-21.
Primary sources and further reading
Tax rules depend on the tax year and individual circumstances. Confirm the current IRS guidance before filing.