2026 Tax Inflation Adjustments: What High Net Worth Taxpayers Need to Know

Summary of 2026 tax updates for strategic year-end planning

On October 9, 2025, the Internal Revenue Service (IRS) released its annual inflation adjustments for the 2026 tax year, reflecting the latest updates under H.R.1, the One, Big, Beautiful Bill Act (OBBBA). The shifts can meaningfully impact high-income earners, business owners, and estate planners. Understanding these changes now allows for strategic planning before year-end 2025.

What’s changing and not changing for taxpayers in 2026?

1. Standard Deductions Increase Again

For 2026, the standard deduction rises modestly:

While many high-income households itemize, these increases can still influence marginal tax efficiency, especially when factoring in state and local tax (SALT) limitations or charitable deduction strategies.

2. Marginal Tax Rates: 37% Top Bracket Remains

The top federal income tax rate of 37% continues for 2026, applying to income above $640,600 for single filers and $768,700 for joint filers.

Key brackets include:

• • 35% over $256,225 ($512,450 for joint filers)
  • 32% over $201,775 ($403,550 for joint filers)
  • 24% over $105,700 ($211,400 for joint filers)

While rates remain stable, bracket creep due to inflation indexing may subtly reduce effective tax burdens for some investors and business owners.

3. Alternative Minimum Tax (AMT) Relief

For 2026, the AMT exemption increases to:

• • $90,100 for unmarried taxpayers
  • $140,200 for joint filers

Phaseouts begin at $500,000 and $1 million respectively.

Given the AMT’s complexity, high earners should continue multi-year planning to manage incentive stock options, private equity interests, and other AMT-triggering events.

4. Itemized Deduction Changes

Beginning in the 2025 tax year, the federal deduction limit for State and Local Taxes (SALT) has been temporarily raised from $10,000 to $40,000 for most individual taxpayers. The limit is increased to $40,400 for 2026. The increased deduction is available to most taxpayers with modified adjusted gross income (MAGI) of $500,000 or less. The higher limit is completely phased out for MAGI of $600,000 or more. This higher SALT limit is scheduled to sunset after 2029.

Keiter Insight: Starting in 2026, OBBBA reduces the itemized charitable deduction for taxpayers using itemized deductions. Only charitable deductions in excess of .5% of your adjusted gross income (AGI) can be deducted. Additionally, for taxpayers who are in the 37% tax bracket a new limitation reduces the value of most itemized deduction by 2/37ths. This effectively caps the tax benefit of itemized deductions for top earners at 35%.

5. Estate & Gift Tax Planning Opportunities

The federal estate tax exemption will rise to $15 million per individual in 2026, up from $13.99 million in 2025.

That means a married couple can shield up to $30 million from federal estate tax with proper planning.

Keiter Insight: Previously, the estate tax exemption was set to expire after 2026, likely reducing it by half. Without new legislation, the $15 million exemption is expected to remain. The annual gift exclusion remains $19,000 per recipient.

6. Enhanced Employer and Family Benefits

Several provisions in H.R.1 offer expanded incentives for business owners and families:

• • Employer-Provided Childcare Credit increases fivefold to $500,000, or $600,000 for eligible small businesses.
  • Adoption Credit rises to $17,670 per child, with up to $5,120 refundable.
  • Health FSA contribution limit increases to $3,400 with a $680 carryover.
  • Foreign Earned Income Exclusion climbs to $132,900, benefiting global executives and expatriates.

These adjustments, though incremental, reinforce the growing tax advantages tied to employer-supported benefits and global mobility planning.

7. What Has Not Changed

Some key provisions remain fixed under H.R.1:

• • Personal exemptions remain at $0, made permanent under the new law.
  • Itemized deduction limits stay repealed for most taxpayers, though the 37% cap on deduction benefits continues for top earners.
  • Lifetime Learning Credit phaseout thresholds remain unchanged: $80,000–$90,000 ($160,000–$180,000 for joint filers).

Keiter Insight: Planning ahead for 2026 and beyond

While inflation adjustments may seem routine, they create strategic opportunities for timing income, capital gains, charitable giving, and estate transfers. With the 2026 deduction limitations looming, now is the time to:

• Review estate and trust structures for potential lifetime transfers.
• Revisit executive compensation packages under new AMT thresholds.
• Evaluate business tax credits and employee benefit programs under the enhanced limits.
• Evaluate timing of charitable contributions.

Our tax team works closely with high-net-worth families, entrepreneurs, and executives to tailor strategies around changing tax law.

Each taxpayer’s situation is unique, and you should speak with your tax and other financial advisors before making any changes to your tax or estate planning approach. If you have any questions, please contact your Keiter Opportunity Advisor.

Sources:

IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill | IRS.gov| The Limitation on Itemized Deductions in H.R. 1 | State and Local Tax Deductions