Tax Insights March 2026

Last year our “Tax Insights” newsletter focused on the uncertainty of the Tax Cuts and Jobs Act of 2017 (TCJA) that was due to expire at the end of 2025. On July 3, 2025, Congress passed the One Big Beautiful Bill Act (OBBBA). Weighing in at close to 1,000 pages, we thought it would be a good time to highlight the most significant changes that may affect your financial planning for the upcoming year and beyond.

Tax Rates

Without the passage of the OBBBA, tax brackets would have reverted to 10%, 15%, 25%, 28%, 33%, 35%, and a top rate of 39.6%. For 2026, the tax brackets are as follows:

The TCJA lowered income tax rates to 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Trump has proposed to extend or make permanent these lower rates and potentially reduce them further by increasing tariffs. However, if no agreement can be reached, the brackets revert to pre-TCJA rates of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% on January 1, 2026.

Standard Deductions

Without the passage of the OBBBA, the standard deduction would have been cut by almost 50%. Not only was it not cut, but it was also increased, and an additional “Senior Deduction” was made available to those who qualify.  The standard deduction for 2026 for the 4 most common filing statuses is as follows:

The OBBBA also allows for an additional “Senior Deduction” of $6,000 available for those individuals 65 and older. A married couple, filing jointly, both aged 65 or over could potentially have an additional deduction of $12,000, for a total of $47,500! (Note: This deduction is available for the 2025 tax year. Be aware that it is subject to income limits and begins to phase out for single filers with modified adjusted income (MAGI) of $75,000 and for married couples with a MAGI of $150,000. MAGI is defined as Adjusted Gross Income with certain deductions added back in with the most common ones being tax-exempt interest, IRA contributions and student loan interest).

Estate and Gift Taxes

For 2026, the estate and gift tax exemptions will increase to $15 million per person or $30 million for a married couple filing jointly. The federal gift tax exemption is the total amount of gifts an individual can give to others during their lifetime without incurring a gift tax. It is unified with the federal estate tax exemption, so an individual can use part of their lifetime gift tax exemption to make taxable gifts during their lifetime and the remaining portion to shelter their estate from federal estate taxes after they pass away.

There is also the annual gift tax exclusion which is a set dollar amount that an individual may gift to another individual each year without needing to report it to the IRS and without reducing their federal gift tax exemption. The annual gift tax exclusion is typically adjusted to account for inflation each year and is $19,000 (or $38,000 for married couples that choose to gift split) in 2026.

Itemized Deductions

With the increase in the standard deduction, fewer taxpayers itemize their deductions. The most common deductions – mortgage interest, medical expenses and charitable contributions – come with limits. For instance, mortgage interest is capped on the first $750,000 of mortgage debt; medical expenses are not deductible unless it exceeds 7.5% of your adjusted gross income (AGI); charitable donations are deductible up to 60% of AGI for cash and 30% of AGI for stock. If you do itemize, the OBBBA increased the state and local tax (SALT) deduction from $10,000 to $40,000. (Note: this deduction is available for the 2025 tax year. Be aware that it is phases out if MAGI is over $500,000 regardless of your filing status).

Final Thoughts

While the OBBBA did bring clarity to these issues, each tax situation is unique. We encourage you to work with a tax advisor or estate planning specialist who can help you understand how these changes may affect your personal circumstances.