The 2026 tax year marks one of the most consequential shifts in the federal tax landscape since the original Tax Cuts and Jobs Act. Permanent rate brackets, expanded deductions, and new exemptions are only the beginning. Recent legislation has reshaped long‑standing rules around Qualified Business Income (QBI), the cap on state and local tax (SALT) deductions, and bonus depreciation—changes that directly affect individuals, business owners, and investors alike.
Understanding this new framework is critical. Below, we highlight the most important 2026 tax updates and what they may mean for your planning opportunities.
Permanent Individual Tax Rate Brackets Bring Stability
One of the biggest concerns heading into 2026 was the potential expiration of lower individual tax rates. That cliff is now gone. The seven‑bracket system—ranging from 10% to 37%—is permanent, with income thresholds adjusted annually for inflation.
For 2026, inflation adjustments increase bracket thresholds and standard deductions, reducing “bracket creep” as incomes rise. The standard deduction alone increases to:
- $32,200 for married couples filing jointly
- $16,100 for single filers
- $24,150 for heads of household
Why this matters: Long‑term income planning—such as Roth conversions, compensation timing, or retirement distributions—can now be modeled with far more certainty.
Expanded Deductions and New Exemptions
Beyond rate stability, 2026 introduces several expanded deductions that may reduce taxable income for a wide range of taxpayers:
- Higher standard deductions are now permanent and indexed for inflation
- Expanded adoption and AMT exemption amounts take effect in 2026
- The federal estate tax exclusion rises significantly for 2026, though long‑term estate rules remain an important planning area.
These changes may shift the balance between itemizing and taking the standard deduction, especially when paired with SALT deduction changes discussed below.
Qualified Business Income (QBI) Deduction Is Here to Stay
For pass‑through business owners, one of the most impactful updates is that the Section 199A QBI deduction is now permanent at up to 20% of qualified business income.
Key points for 2026:
- Applies to S corporations, partnerships, LLCs, and sole proprietors
- Income thresholds and phase‑out ranges are adjusted upward for inflation
- Wage and property tests continue to apply at higher income levels
- Certain service businesses remain subject to phase‑out rules
Planning implication: Entity structure, reasonable compensation for S‑corp owners, and timing of income and expenses all play a larger role in maximizing this deduction.
SALT Deduction Cap Increases—With Limits
The SALT deduction cap increases from $10,000 to $40,000, a major shift for taxpayers in higher‑tax states. However, there are important nuances:
- The higher cap applies through 2029
- Phase‑outs begin once modified AGI exceeds defined thresholds
- The cap does not fall below $10,000 even at higher income levels
For some taxpayers, this change alone may tip the scale back toward itemizing deductions in 2026.
Bonus Depreciation Rules Reset
Another major change is the restoration of 100% bonus depreciation for qualifying property placed in service after 2025.
This allows businesses to immediately expense the full cost of eligible equipment, machinery, and certain technology—new or used—rather than depreciating it over time.
Why this matters: Timing capital purchases now has a direct and immediate cash‑flow impact, making proactive planning especially important for growing businesses.
Why 2026 Planning Isn’t Optional
These changes create opportunity—but also complexity. The interaction between permanent tax rates, QBI deductions, SALT rules, and depreciation decisions means that reactive tax filing is no longer enough.
At PriceKubecka, we’re helping clients:
- Model their 2026 and multi‑year tax scenarios
- Re‑evaluate entity structure and compensation strategies
- Optimize deductions and capital investments
- Reduce surprises through proactive, year‑round planning
Let’s Plan Ahead
If you haven’t reviewed how the new 2026 tax framework affects your personal or business situation, now is the time. Early planning provides the flexibility needed to make informed decisions—and to fully benefit from these changes. Contact Us to schedule a 2026 tax planning discussion.