2026 Federal Inflation Changes Could Impact Your Tax Bill

The Internal Revenue Service (“IRS”) has announced the inflation adjustments for tax year 2026, and these changes are significant. These updates affect everything from the standard deduction and tax brackets to retirement contribution limits and credit thresholds. While the adjustments are designed to reflect the rising cost of living, they also introduce important planning opportunities and potential drawbacks for taxpayers and business owners.

At Wilson Tax Law Group, APLC, we understand how small changes in the numbers can have a big consequence for your overall tax strategy. Let us break down the highlights and what they might mean for you.

Key highlights of the IRS inflation adjustments include higher standard deductions for Married filing jointly ($32,200), Head of Household ($24,150), and Single/Married filing Separately ($16,100). These adjustments translate to fewer taxpayers having to itemize deductions but California may continue to make the decision to itemize complex; as it does not always align with Federal rules. It is recommended to have a strategic planner to help ensure you are not missing potential deductions at either level.

Another important highlight is the upward shift of income tax brackets which may be good news for most taxpayers. However, it is highly recommended to maintain tax planning efforts under the guidance of a trusted tax attorney, to closely monitor the timing of income and deductions. This is especially helpful in circumstances where there is variable income that needs to be reported. A third highlight, which we posted about previously, are the raised limits for retirement contributions (Sept. 18, 2025 blog post), health savings accounts (HSAs), and earned income credits. For anyone who is nearing retirement or managing multiple sources of income, these adjustments may provide opportunities to reduce taxable income while strengthening long-term financial plans.

Why You Need a Tax Attorney

Tax software cannot analyze strategy. Though your accountant can prepare your return, a tax attorney can protect, plan, and advocate for your long-term interests. A trusted tax attorney can translate Federal and California tax law interactions, identify opportunities to minimize liability across both systems, represent you before the IRS or FTB if issues arise, and help you structure your business, trusts or estates to adapt to new thresholds and preserve wealth. The 2026 inflation adjustments are more than just numbers; they are signals for change. Having an experienced advocate ensures that those changes work for you, not against you.

Final Thoughts

The IRS’s 2026 inflation adjustments highlight one truth: tax planning is never static. The rules evolve, your income shifts, and opportunities open and close every year.

Before filing season arrives, take time to review your tax position, discuss your goals, and craft a proactive plan with a trusted tax attorney.

At Wilson Tax Law Group, APLC, we help individuals and businesses across California navigate these changes with precision, confidence, and compliance. Schedule a consultation today to see how these new inflation adjustments may impact your tax strategy and how we can help you stay ahead of what’s next.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.