Inflation Adjustments for 2026

January 2026

The Internal Revenue Code imposes income, estate, gift, and generation skipping transfer taxes.

Certain items are subject to annual inflation adjustments.

The Service published Rev. Proc. 2025-32, which sets forth inflation adjusted items for 2026. The following increases are beneficial for tax planning.

Income tax is imposed on taxable income. I.R.C. § 1.

For married individuals filing joint returns, and surviving spouses, the maximum rate of 37% is imposed on taxable income over $768,700. Rev. Proc. 2025-32, § 4.01.

For married individuals filing separately, the maximum rate of 37% is imposed on taxable income over $384,350 Rev. Proc. 2025-32, § 4.01.

For unmarried individuals, the maximum rate of 37% is imposed on taxable income over $640,600. Rev. Proc. 2025-32, § 4.01.

For estates and trusts, the maximum rate of 37% is imposed on taxable income over $16,000. Rev. Proc. 2025-32, § 4.01.

Taxable income is calculated by subtracting the standard deduction from gross income for an individual who does not elect to itemize deductions. I.R.C. § 63(b).

For married individuals filing joint returns, and surviving spouses, the standard deduction is $32,200. I.R.C. § 63(c); Rev. Proc. 2025-32, § 4.14.

For married individuals filing separately, the standard deduction is $16,100. I.R.C. § 63(c); Rev. Proc. 2025-32, § 4.14.

For unmarried individuals, the standard deduction is $16,100. I.R.C. § 63(c); Rev. Proc. 2025-25, § 4.14.

Estate tax is imposed on the transfer of a taxable estate of a decedent who is a citizen or resident of the United States. I.R.C. § 2001(a).

The rate is 40%. I.R.C. § 2001(c).

The estate tax is calculated by subtracting the unified credit against the estate tax. I.R.C. § 2010(a).

For an individual that dies in 2026, the basic exclusion amount is $15,000,000 for determining the amount of the unified credit against estate tax. I.R.C. § 2010(c); Rev. Proc. 2025-32, § 2.13.

Gift tax is imposed on the transfer of property by gift by an individual. I.R.C. § 2501(a).

The rate is 40%. I.R.C. § 2502(a); I.R.C. § 2001(c).

The first $19,000 ($19,000 in 2025) of gifts to any person (other than gifts of future interests) are excluded from the total amount of taxable gifts. I.R.C. § 2503(b); Rev. Proc. 2025-32, § 4.42(1).

The gift tax is calculated by subtracting the unified credit against the gift tax. I.R.C. § 2505(a); I.R.C. § 2010(c).

The basic exclusion amount is $15,000,000 for determining the amount of the unified credit against gift tax. I.R.C. § 2505(a); I.R.C. § 2010(c); Rev. Proc. 2025-32, § 2.13.

GST tax is imposed on every generation skipping transfer. I.R.C. § 2601.

The rate is 40%. I.R.C. § 2602; I.R.C. §§ 2641(a)(1) & (b); I.R.C. § 2001(c).

The GST tax is calculated based on the inclusion ratio, which depends on allocation of the GST exemption. I.R.C. § 2641(a)(2); I.R.C. § 2631(a).

For an individual that dies in 2026, the GST exemption is $15,000,000. I.R.C. § 2631(c); I.R.C. § 2010(c); Rev. Proc. 2025-32, § 2.13.