Every year the IRS adjusts tax brackets, deductions, and credits for inflation. Most years the changes are modest. This year they are bigger than usual because the One Big Beautiful Bill Act, signed into law in 2025, made several provisions permanent and added new ones that affect how much you keep in your pocket.
The 2026 tax year adjustments were released by the IRS in Revenue Procedure 2025-32, and they apply to tax returns you will file in 2027. Source: IRS IR-2025-103. Here is what changed and what it means for you.
Higher standard deduction
The standard deduction is what most taxpayers use instead of itemizing. For 2026, the amounts are:
- $16,100 for single filers and married individuals filing separately (up from $15,750 in 2025).
- $32,200 for married couples filing jointly (up from $31,500 in 2025).
- $24,150 for heads of household (up from $23,625 in 2025).
Source: IRS IR-2025-103. The increase reflects inflation plus a boost from the OBB Act. For a typical single Orlando resident, that means roughly $350 more of your income is not taxed compared to last year. For a married couple filing jointly, it is about $700 more.
Tax brackets shifted up
The seven tax rates - 10%, 12%, 22%, 24%, 32%, 35%, and 37% - stayed the same, but the income ranges for each bracket increased by about 2.3% to account for inflation. That means you can earn more before you move into a higher bracket. Source: IRS IR-2025-103.
For single filers, the 22% bracket now starts at $50,400 (up from $48,476). The 24% bracket starts at $105,700 (up from $103,351). And the top 37% bracket kicks in at $640,600 (up from $626,351). These adjustments mean most workers will not pay a higher effective rate unless their income grew faster than inflation.
For married couples filing jointly, the key thresholds are: 22% starts at $100,800, 24% at $211,400, 32% at $403,550, 35% at $512,450, and 37% at $768,700.
New OBBB provisions: no tax on tips, overtime, and more
The One Big Beautiful Bill Act introduced several new deductions that Orlando workers and small business owners should know about. Source: IRS IR-2025-103.
- Tip income deduction. If you work in a tipped occupation - restaurants, hospitality, salons - you may deduct qualified tip income up to $25,000 for 2026. The rules are new, so make sure your employer reports tips properly on your W-2.
- Overtime pay deduction. Workers who earn overtime may deduct the portion that exceeds their regular rate of pay, up to $12,500 for single filers and $25,000 for joint filers. This phases out at higher income levels.
- Senior deduction. If you are age 65 or older, you may claim an additional $6,000 deduction per qualifying individual. This is on top of the existing additional standard deduction for seniors. It phases out for individuals with modified AGI over $75,000 ($150,000 for joint filers).
- Car loan interest deduction. Interest on qualified auto loans may be deductible for tax years 2025 through 2028. This is a new deduction, so check with your tax preparer to see if your vehicle loan qualifies.
Higher Earned Income Tax Credit
For 2026, the maximum Earned Income Tax Credit for families with three or more children increased to $8,231, up $185 from 2025. Source: IRS IR-2025-103. The income limits also rose, so more Orlando workers may qualify. EITC is one of the most valuable credits for working families, and many eligible taxpayers miss it because they do not know about it.
Alternative Minimum Tax exemption
The AMT exemption for 2026 is $90,100 for single filers and $140,200 for married couples filing jointly. Source: IRS IR-2025-103. Most taxpayers will not be affected, but if you have significant deductions, it is worth reviewing.
Estate tax exclusion jumps to $15 million
For estates of people who die in 2026, the basic exclusion amount is $15 million, up from about $14 million for 2025. Source: IRS IR-2025-103. This affects very few Orlando families but is the largest estate tax exclusion in history.
Adoption credit increases
The maximum adoption credit for 2026 is $17,670, up from $17,280 in 2025. Source: IRS IR-2025-103. Up to $5,120 of this may be refundable.
What this means for Orlando residents
Florida has no state income tax, which means your federal return is the main event. These federal changes matter more here than in states with their own income taxes. The higher standard deduction alone means many Orlando taxpayers who used to itemize will now take the standard deduction and come out ahead.
The new tip and overtime deductions are particularly relevant for Central Florida’s large tourism and hospitality workforce. If you work in that industry, these deductions could save you real money. But they require proper recordkeeping. Make sure your employer is reporting your income correctly, and keep your own records of tips and overtime hours.
For Orlando retirees, the new $6,000 senior deduction is significant. If you are 65 or older and your income is below the phaseout threshold, this is money you keep that was not on the table before.
Talk to a professional
The tax code changes every year, and 2026 has more changes than most. A good tax preparer helps you navigate them. At MLPS, we work with individuals, families, and small businesses across Orlando to make sure every return captures the deductions and credits available under current law. Give us a call if you want to go over how these changes apply to your situation.