2026 Tax Year Adjustments Announced: Higher Standard Deduction and Retirement Limits
The IRS released 2026 inflation adjustments affecting tax brackets, standard deductions, and retirement contribution limits, with major increases for married filers and new senior tax deductions under the One Big Beautiful Bill.
Standard Deduction & Tax Brackets Rise for 2026
On October 9, 2025, the Internal Revenue Service announced the tax year 2026 annual inflation adjustments for more than 60 tax provisions. For tax year 2026, the standard deduction increases to $32,200 for married couples filing jointly, along with proportional increases for other filing statuses. These adjustments will apply to tax returns filed in 2027, reflecting both regular inflation indexing and structural changes from the One Big Beautiful Bill Act.
Many taxpayers will see higher deductions, higher contribution limits, and new retirement rules in 2026, but they'll also lose the IRS's free Direct File option. Additionally, there are some changes for the 2026 tax filing season that people who are 65 years of age and older should be aware of, particularly an enhanced deduction for seniors, which is a provision of the One Big Beautiful Bill.
Retirement Savings Limits Also Increase
The Internal Revenue Service announced that the amount individuals can contribute to their 401(k) plans in 2026 has increased to $24,500, up from $23,500 for 2025. The limit on annual contributions to an IRA is increased to $7,500 from $7,000. These increases apply to tax year 2026 contributions made through the filing deadline in 2027.
If you're a foreigner earning US employment or self-employment income, these changes directly affect how much pre-tax income you can shelter in retirement accounts. If you're 65 or older, the enhanced senior deduction may significantly reduce your taxable income on your 2026 return (filed in 2027). Review your W-4 withholding in 2026 to ensure you're accounting for the higher standard deduction.
Sources
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